The Affordable Care Act, or more commonly known as ACA or “Obamacare”, continues to put pressure on providers and employers with respect to insurance coverage’s, quality of care standards, cost controls, and overall coverage. A significant component of ACA is the enforcing governmental entity, which is the IRS. Yes – the same IRS that is in charge of tax collection, has a reputation for making rules completely unintelligible, enforcing large fines against the “little guys” while big offenders and bazillion-aires pay little or nothing, targeting and auditing those they politically disagree with, and running their own court system with practically no due process for the accused.
The IRS continues to put out memos regarding the ACA’s 501(r) rules that affect non-profit hospitals and the collection of what is owed to them. There are a number of items to be considered, but for the sake of this Post lets take a look at the discussion regarding “extraordinary collection efforts” as defined by the 501(r) rules and enforced by the IRS. A non-profit hospital, among other things, MUST create a financial assistance policy and make that policy known in their community. Within the first 120 days from the first billing date a patient has, the provider is prohibited from taking any “extraordinary collection efforts”, which include credit reporting, filing a lawsuit, and a few other actions. The rules go on to extend to another 120 days if the hospital has not correctly created and communicated their financial assistance policy, OR the patient asks for a financial assistance form. If the patient asks for one, then all “extraordinary collection efforts” must cease and/or be reversed, indefinitely. Or until the hospital has reviewed their application for assistance. So – no credit reporting, lawsuit, garnishments for up to 240 days after the first billing date.
Next, lets look at the current trend on patient payments into the U.S. healthcare system. A recent study showed that in 1990, 5% of healthcare in the U.S. was private-pay. in 2007 that number had bumped to 14%. in 2014, it could be as high as 40%! Private-pay has moved into the third spot for healthcare reimbursements, behind Medicare and Medicaid and in front of commercial insurances. The ACA has created a system of larger co-pays, larger co-insurances, and more out-of-pocket plans than previously found in the country.
And now lets talk about ICD-10 and the impact on the revenue cycle for healthcare. This new coding system (delayed by the federal government 4 times since it was first introduced is set to go into effect in the Fall of 2015) has over 165,000 codes describing what malady you go to the doctor for. This compares to about 44,000 codes currently in use under ICD-9. A recent study concluded that providers will be 30% LESS productive using ICD-10 and coders will be 50% less productive! Current denial rates for bad coding run 3-5%, but this study shows that number may jump as high as 30%.
1) The IRS is in charge of the Affordable Care Act, and even though they can do whatever they want in trying to collect taxes, they are forcing non-profit hospitals to give people almost an entire year to fill out a financial aid form while shielding them from any negative effects for non-payment.
2) More and more people are using insurance plans with higher deductibles and copays under the ACA, increasing the amount of private pay income to the healthcare industry exponentially.
3) ICD-10 is going to make billing insurances more expensive, less productive, less accurate, and cut into provider productivity significantly.
The next few years are going to have significant challenges for all of us who work in and around healthcare, especially the revenue cycle.