Thursday, June 20, 2013

Doctors and Hospitals Learning That ObamaCare is Not Their Friend

  • Doctors to be liable for up to two months of unpaid claims in the state exchanges 
  • Not-for-profit hospitals forced to wait up to 240 days before they can report non-payment to collections 
  • Less money available for hospitals that disproportionately treat the lowest income populations 
Doctors and hospitals are learning that when Nancy Pelosi said, "we have to pass the bill so you can find out what is in it," good news for them did not lie ahead. We now see what happens to major stakeholders when they don't pony up enough 'protection' money in the form of lobbyist dollars.

First, we learned that PPACA requires a three month window before an Exchange policyholder can be terminated from an insurance plan for nonpayment. Currently, the industry operates on a 30-day standard. But lawmakers and bureaucrats insisted that nonpaying policyholders get three months before they can be removed from an insurance plan. As you can imagine, insurers squealed vehemently. But more importantly they 'invested' in a seat at the table during the drafting process and were able to secure an arrangement whereby they would only be on the hook for the first month of claims incurred by a non-payer.

So who pays for the other two months when an "insured" racks up bills but doesn't pay premium? Providers. And now that doctors and hospitals are just starting to learn this; the are not happy. Might this be partly why Blue Shield will only offer 36% of its normal list of docs in the California exchange?

This week we learned that not-for-profit hospitals are going to be forced to wait 240 days before they can actually turn someone in to collections for non-payment of care. Evan Albright at Forbes writes:
A decision by the IRS on a proposed rule instituting two 120-day grace periods is expected sometime on or after July 5....
[N]ot-for-profit hospitals are subject to additional oversight by the IRS for obvious reasons: If you are not paying taxes, the IRS wants to make sure you are doing so on legitimate grounds. 
Almost exactly one year ago the IRS issued proposed regulations that, among other things, defined how and when nonprofit hospitals can collect medical bills. The proposed rules defined “extraordinary collection activities” or ECAs, which are prohibited for any patient who may qualify for financial assistance. 
As part of their charter to qualify for nonprofit status, hospitals must offer financial assistance (also called “charity care”) to its patient population that qualify based on income, lack of insurance, and other factors.... Until a nonprofit hospital can determine with certainty whether a patient qualifies for financial assistance, the proposed IRS regulations state that it must give that patient up to 240 days to request and fill out an application for financial assistance. During that period neither the hospital nor its collection partners can report the delinquent bill to credit reporting agencies, the proposed regulations state. ... 
Healthcare provider organizations have argued that reporting a delinquent bill to a credit reporting agency does not nor should not qualify as an “extraordinary collection activity” and prohibiting it will hamstring them from collecting what they are owed....
So first, providers are going to be liable for two months of uncompensated care in the exchanges when patients stop paying their premiums. Second, if and when that happens, providers may have to wait up to 240 days before they can report the individual to collections. And the last in this week's tri-fecta reveals that changes made by PPACA will reduce the amount of taxpayer dollars available to hospitals who go out of their way to treat low income populations. This is explained in the below from Sara Rosenbaum at Health Reform GPS:
For thirty years, the Medicare and Medicaid programs have furnished additional payments to hospitals that furnish a disproportionate share of services to low income populations. Despite the fact that the two disproportionate share hospital (DSH) programs share a common mission, they function differently in terms of how the funds actually move to hospitals and in the formulas used to make DSH payments. The Affordable Care Act makes significant adjustments in both DSH programs beginning in 2014 in anticipation of a significant expansion in the proportion of people who have health insurance coverage. ... 
Anticipating a major reduction in the number of low income and uninsured Americans as a result of the ACA’s subsidized health insurance and Medicaid expansions, the law reduces funds available for both Medicare and Medicaid DSH expenditures....
Yes, the United States will provide "insurance" to more people next year. But if the same law that adds more bodies to insurance rolls also punishes providers with more liability and less incentive to treat the most needy, we will see a reduction in healthcare providers. So what good is that insurance card going to do for someone when they can't get an appointment? Massachusetts has tried this and it is not working well as Dr. John Goodman at the National Center for Policy Analysis writes:
The Massachusetts reformers believed that once everyone was insured, patients would go to the doctor’s office for primary care rather than to the hospital emergency room. But in expanding the demand for care, they (just like ObamaCare) did nothing about supply. The newly insured can’t go to doctors’ offices for their primary care if there aren’t any more doctors’ offices.

Here is what is happening on the ground. Traffic to hospital emergency rooms in Massachusetts is higher today than before health reform. Traffic to community health centers is almost one-third higher than it was before reform. Yet, the time it takes to get care is growing. The wait to see a new doctor in Boston today is two months ― the longest wait in the entire country.