Memorial Day Review of Affordable Health Care

Looking at the key provisions of the ACA:

▪   Basic benefits package defined by the federal government

▪   Increased Medicare payroll tax on upper income earners

▪   Penalty for employers (with 50+ employees) who do not offer healthcare

▪   If an employer doesn’t offer insurance, people will be able to buy it directly in the Health Insurance Marketplace.

▪   Tax credits to small business – by 2014, 50 percent of the employer’s contributions.

▪   The Medical Loss Ratio. At least 85 percent of all premium dollars collected by insurance companies for large employer plans must be spent on healthcare services. For plans sold to individuals and small employers, at least 80 percent of the premium must be spent on benefits.

▪   Eliminating annual limits on insurance coverage for new plans and existing group plans.

▪   No out-of-pocket for many preventive services. All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance.

▪   Children up to age 26 can stay on their parent’s health insurance plan.

▪   No denial of coverage due to a pre-existing condition.

▪   Insurance companies cannot limit the coverage someone receives over his or her lifetime.

▪   Expand who will be eligible for Medicaid. States will receive 100 percent federal funding for the first three years, phasing to 90 percent federal funding in subsequent years.

▪   The law provides consumers with a way to appeal coverage determinations or claims to their insurance company.

▪   Tax credits for middle-low income uninsured. These individuals may also qualify for reduced copayments, co-insurance, and deductibles.

▪    The Individual Mandate. People who are not already covered or fully subsidized will be required to purchase coverage or face a penalty – with some eligible to receive subsidies towards private insurance premiums.

Vincent Vallejo on August 20, 2013, in the Banktec report, reviewed four observations on how the Affordable Care Act will impact healthcare business process outsourcing (BPO)., which are continuously being developed to decrease the administrative burden

With the ever-changing landscape of the U.S. healthcare system, the U.S. healthcare business process market is undergoing a significant transformation. This year, the U.S. healthcare payer, provider, and pharmaceutical outsourcing markets are valued at $11.1 billion, $6.8 billion, and $65.6 billion.

Today’s healthcare industry generates more than 8 billion claim transactions annually, resulting in $2.7 trillion worth of payments processed through a network of costly channels. Unbelievably, a huge percentage of the processing of these transactions is done manually and on paper – resulting in massive inefficiencies and high-dollar write-offs, estimated to exceed $92 billion each year. A healthcare provider’s back-office is typically buried in mountains of claim and payment paperwork. Duplication is rampant, two to three intermediaries handle transactions, payment to providers is always slow – the cost to providers is staggering. The object of outsourcing in healthcare is to:

▪   Improve efficiency and reduce costs

▪   Improve collections and increase yields

▪   Help eliminate write-offs

▪   Enhance in-process claim visibility

▪   Improve provider/patient relationships

 

1. The Medical Loss Ratio does not offer a clear means to lower administrative costs. Thirty cents of every dollar spent on healthcare in the U.S. goes toward administrative costs. While the law says to lower these costs, it doesn’t offer a clear path to make this possible. The law provides for small businesses needing to offer insurance to its employees. The law provides tax credit to middle class families and expands Medicare to the lower class. However, payers and providers are left to figure this puzzle on their own.

 2. Business Process Outsourcing can alleviate the Medical Loss Ratio burden. Services to assist providers in payment reconciliation, denial management and re-billing disputed claims can increase providers’ revenues by as much as 3 to 5 percent. In order to comply with the Medical Loss Ratio, every percentage point counts. The healthcare industry will discover what large corporations have always known. Outsourcing high-volume, data-intensive business processes can drive down costs.

3. Providers will be motivated to claim every dollar available to remain profitable. Healthcare providers write off over $92 billion per year due to an inability to get accurate and timely claim and payment information. BPO companies do not just offer savings on administrative personnel. By improving the process, providers can make more money from abandoned claims. Business process outsourcing companies streamline the revenue cycle and make the payer-provider relationship more efficient.

 4. The Affordable Care Act requires standardized billing and an electronic exchange of health information. More than half of transactions between payers and providers are paper-based – significant contributor to the high cost of healthcare. Healthcare remains one of the few industries that relies on paper records. A BPO company with expertise will be able to clear out the warehouse of dusty paper records and replace it with fully secure, searchable data.

The Affordable Care Act is large and complicated, but outsourcing solutions exist to simplify the added administrative burden, which we will discuss further in future blogs.

Over the last many weeks we have discussed a number of pros and cons regarding the Affordable Care Act. Whether we want to argue the nature of free health care for all and the constitution, the fact is that health care for all is a great concept. Yes, our health care system is broken or sick and that it is considered to be the most costly with an extremely poor return on investment. Why?

The answer is simply yet complex. Our rights, our freedom, and desire to make money, allow us to make bad decisions and with no cost consequences. We demand CT scans or MRI’s when we get headaches at no cost to each of us and “forcing” the health care worker to provide these expensive tests to cover “their behinds” so that they won’t get sued.

Traditional medicine and our freedoms are making us sick. We as a notion lack self control and the results are that chronic diseases such as heart disease, stroke, cancer, diabetes, and arthritis are among the most common and preventable of all of the problems on the US.

I site the Mark Twain quote: “The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you druther not” That is, the four modifiable health risk behaviors that we just fail to improve are the lack of exercise or physical activity, poor nutrition, tobacco use and excess alcohol consumption. As Ron Graham further discusses in the Healthcare blog, these health risk behaviors are responsible for much of the high health care cost, illness, suffering and early death related to the chronic deases that we discussed. Consider that the latest reported obesity rates is the US is 27.7%. Unbelievable!

How then can we improve the health care system if we “give” insurance coverage without consequence for bad behavior?

So, go have a wonderful Memorial Day picnic and think and chose healthy while you prepare, cook and eat at your holiday outing.

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