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Are You Ready For the Changes Ahead?

Do you know about the latest ACA impacts on hospitals? The Affordable Care Act (ACA) is coming, but is your organization ready? In today’s post we will explore the top 10 areas of impact that the Affordable Care Act will have on hospitals.  The changes are sweeping, and will cause significant shifts in everything from reimbursement and revenue cycle, to clinical operations and needed IT structure.  Make sure that your hospital is prepared for the changes by gauging the impact of the ACA implementation.


ACA Impacts on Hospitals

The Affordable Care Act Overview

The Patient Protection and Affordable Care Act was signed into law by President Obama in March 2010, one week later the Health Care and Education Reconciliation Act was also signed into law.  Together these two laws are effectively referred to as the Affordable Care Act, or Obamacare.  Some of the changes related to the Affordable Care Act have yet to be implemented, but between Oct. 1st of 2013 and Jan. 1st of 2014 the healthcare landscape will undergo significant change.  Hospitals, in particular, will feel the effects of ACA implementation.  If your organization has not already began preparing, the time to do so is now.  Those who fail to re-examine their operations and organizational structure and finance could find themselves financially crippled and clinically out of compliance if proper preparation is not undertaken.  Here are the top 5 largest ACA Impacts on Hospitals, and the most relevant changes that your organization should be preparing for.

1. Impacts of ACA on Hospitals:  Increased Volume of Patients, and More Insured Patients

One of the most progressive steps taken by the Affordable Care Act is an insurance mandate which will effectively require that individuals have health insurance, or pay a financial penalty.  As part of an aggressive outreach program States are expanding Medicaid eligibility and flowing those who qualify into the Medicaid/Medicare system.  For those who do not qualify, insurance will still be required and can be purchased through the Health Insurance Exchange Marketplace which will become open for individuals to enroll in health insurance on Oct. 1st 2013.  What this means is a massive amount of newly insured individuals.  Estimates put the number of newly insured between 32 million and 64 million individuals.  Many of these individuals have not previously received healthcare, or received minimal care, and the volume of healthcare services that hospitals and providers will need to anticipate covering should increase.

2. Movement from Quantity to Quality Tied to Payments

New Pay for Performance fee structures will reimburse hospitals, to a limited degree, according to the quality of care which they provide.  Hospitals will now need to have more strict quality standards and measurements in place so that they can report and be accountable for certain events at their facilities.  Those hospitals which meet or exceed performance measures will receive an increase in the base amount that Medicare/Medicaid provides.  Those which do not meet quality of care standards will see their payments reduced.  Hospitals should be ramping up their reporting and administrative structures to ensure that not only are they providing up to the new requirements, but that this information is able to be pulled and analyzed for reporting, or they could face a harsh financial cut back.

3. Bundled Payments & How The ACA Impacts on Hospitals

For certain conditions there will be bundled payment pilots which will aim be aimed toward integrating care across hospitals, primary care providers, and other healthcare professionals.  Pilots began in 2013, and if proven successful will be expanded beginning in 2016.  Hospitals should keep an eye on the outcome of these pilots and be prepared to evaluate and implement effective models should they prove successful.  Significant work will need to be conducted to ensure seamless integration between hospital care and post acute care, and it will be fundamentally important for hospitals to begin opening communication with other providers and expanding and strengthening their discharge planning processes.

4. Hospital DSH Payment Reduction

Hospitals now receive a Disproportional Share Hospital Payment, or DSH Payment from Medicaid which provides reimbursement to the facility for care that was provided to those who were uninsured.  This payment has been instrumental in maintaining a strong bottom line for hospitals, particularly those in areas which treat a significant number of uninsured who are not enrolled in the Medicaid/Medicare program and cannot cover the cost of their care.  Beginning in 2014 this payment will be decreased by 75%.   The justification for this decrease is that now hospitals will no longer need to treat a large number of uninsured patients (as they will now be enrolled in either Medicaid/Medicare, both Medicaid and Medicare, or have insurance purchased through the exchanges.) This is causing concern among hospital administrators.  In the short term it has the potential to create significant cash flow problems for hospitals which were largely dependent upon this funding, and from a long term perspective the uncertainty in the numbers who will now obtain insurance makes structuring financial predictions shaky at best.  If a large number of people do not become enrolled under the exchanges or through Medicaid expansion hospitals may find themselves continuing to provide care for those who are not covered, but facing financial shortfalls due to the DSH Payment reduction.

5. Penalties for Re-admissions and Hospital Acquired Conditions

Hospitals will now face financial penalties for both high re-admission rates, as well as the occurrence of hospital acquired conditions (such as infections or falls which take place while at the facility). As an additional transparency measure, some of this reporting will be made available to the public.  These rates will be compared against national averages and established benchmarks.  Those hospitals which have high readmission rates, or a high occurrence of hospital acquired conditions will have their Medicaid payments reduced by 1% initially, and more as time goes on.  Hospitals have voiced concerns over these measures, as some hospital re-admissions and acquired conditions may not have direct causation which is aligned with the hospital and the quality of care.  Hospitals will certainly want to make sure that they have reporting measures and sound clinical processes in place to effectively monitor re-admissions.  The same reporting and clinical processes will be needed for hospital acquired conditions, with addition attention required for hospital based safety and infection prevention programs.  Of course, all of the reporting required again has the potential to significantly increase administrative costs for the organization, so a sound plan will need to be implemented to keep these costs aligned.

Get Ready for the Changes With a Free ACA Impacts on Hospitals Webinar

It is important that every healthcare organization has a thorough understanding of the Affordable Care Act, and how it has the potential to impact them and their organization.  Change will be swift and the reform will be sweeping, requiring a number of clinical, administrative, and financial changes in order to operate successfully and profitably.  If you would like more information about how to prepare your organization for the ACA Impact, BHM will be hosting a free no obligation webinar entitled The ACA Impact on Hospitals, we hope that you will join us.

Title: ACA Impacts on Hospitals

Description: Find out what your organization can do to brace for the Affordable Care Act (ACA) and what strategies you can implement now to succeed in a changing environment.

Date & Time: Thu, Oct 3rd, 2013 at 12:00 pm EDT

Please register for the above meeting by visiting this link:

Once you have registered, we will send you the information you need to join the webinar.

Visit BHM Healthcare Solutions‘ blog to learn more about the ACA impacts on hospitals and much more…