Is the ACA (Affordable Care Act) Really Going Away?

Recommended next steps for physician practices are discussed by the author.

As you have probably heard by now, a federal judge in Texas, U.S. District Judge Reed O’Connor, on Friday, Dec. 14, 2018 struck down the Patient Protection and Affordable Care Act (PPACA) as unconstitutional, ruling that the individual mandate could not be severed from the rest of President Barack Obama’s landmark healthcare law.

The White House, in a statement, said they expect the ruling will be appealed, and “pending the appeal process, the law remains in place.”

What does this mean exactly?

The PPACA promised “quality health insurance coverage for all Americans,” and a potential tradeoff exists between the law’s dual goals of promoting quality and preventing insurance companies from denying coverage or charging higher premiums to patients with preexisting conditions. This issue, which gets lost amid the continued partisan wrangling over the PPACA, will determine the ultimate fate of the law.

In lay terms, what is colloquially known as “Obamacare’s” preexisting conditions provisions literally penalize insurers that offer quality health insurance to the sick. That was not the purpose of those provisions, I would assume. Their purpose was to make health insurance available to the sick. They did so in part by requiring insurers to charge sick enrollees no more than healthy enrollees of the same age (and to do something similar when setting premiums across age groups). The result was that these provisions increased premiums for younger and healthier enrollees, and reduced premiums for older and sicker enrollees.

It is there the problems arose. When the government requires insurers to set premiums at a level below the amount the insurer expects an enrollee will file in claims, that government-mandated price ceiling penalizes insurers that offer quality coverage to those enrollees.

To illustrate, suppose insurers expect the average congestive heart failure (CHF) patient to file $75,000 in claims, and Obamacare requires insurers to charge those patients a premium far below that amount – say, $15,000. If each CHF patient brings an insurer $15,000 in premiums but costs them $75,000 in claims, then each CHF patient an insurer attracts represents a $60,000 loss. Since CHF patients care a lot about the quality of their coverage, they will find and enroll in whichever health plans offer the best CHF coverage. The better the CHF coverage an insurer offers, the more money the insurer loses.

Needless to say, this is not an ideal incentive structure. I can see why it was deemed unfair, or “unconstitutional.” 

Furthermore, the PPACA established a “(requirement) to maintain minimum essential coverage,” commonly known as the “individual mandate.” To compel compliance with the individual mandate, Congress imposed a tax penalty on individuals who were subject to the requirement but chose to disobey it. The PPACA labeled this penalty the “(shared) responsibility payment.” It was originally to be assessed at either $695 or a 2.5 percent share of a family’s household income, whichever was greater.

If the individual mandate requirement is eliminated, all the math must be recalculated, but without any idea of who will purchase a plan and what diseases and chronic conditions they would bring with them.

If the mandate allowing adults to remain on parents’ plans up to age 26 is removed, more kids and teens and young adults in college with no money to pay for healthcare will be placed on Medicaid rolls. (As a parent of a 23-year-old college student in her last semester of her master’s program, this would not sit well with me.)

If employers with at least 50 full-time employees are no longer required to provide their employees with PPACA-compliant health-plan options without a penalty, employers can provide illusory coverage or none at all, leaving employees to face untenable risk.

Obviously, there are flaws and concerns coming from both sides of the political aisle regarding the PPACA ruling. Going forward, here is what I would suggest:

What we need the government to do is tell us:

• Exactly what will be covered, and at what rate of payment?
• What won’t be reimbursed by insurers? (We really don’t care “why” anymore.)
• How many covered lives will be expected, by age, gender, ZIP code, and existing/known diagnosis codes? (For example, will our kids still be able to be insured by their parents until age 26?)

Next, payers should not interfere or involve themselves in non-covered services:

Non-covered services are none of your business, payers. Yes, I said it. If you don’t cover it, why do payers get a vote?

Under HIPAA, the minimum necessary information rule requires that if you don’t collect a premium under your insurance contract and evidence of coverage for an excluded service is deemed investigational, experimental, or unproven, and a patient wants to try it anyway, at their own expense…

Butt out!

If you aren’t paying for that expense, you don’t get to know or control what a physician charges for a service: if we offer it, to whom, why, or what we negotiate as a discount. Not now, and not in a non-PPACA world going forward. (Went on a bit of a rant there. But seriously, if you don’t want to cover it, recognize it, or even discuss it, as a payer, then move on).

What to do while we watch and wait for what comes next:

It is not the time to make long-range plans contingent on continued existence of the PPACA, or the probable appeal. Instead, do this:

1. Reread the PPACA, with the wisdom and hindsight of the past 8-9 years as your new reading glasses. (Sorry, but this is necessary. Refamiliarize yourself with the Act).
2. Remember that co-dependence on third-party payers is not going away anytime soon. Now is the time to scrutinize your contracts with payers. Take a plain-old yellow highlighter and highlight any terms, conditions, provisions, assumptions, or references or compliance requirements that touch on the PPACA in its original March 23, 2010 form.
3. Create a spreadsheet that has the yellow highlighted text from your contracts and administrative guides, as well as provider manuals, attachments, exhibits, pricing, business rules, and even your appeals strategies and tactics. List those in Column A. In Column B, list strategies and tactics for continuance of the PPACA. In Column C, list the alternatives for a non-PPACA marketplace.
4. Determine what can be done to shore up the business regardless of Column B or C. What would work, if implemented now, in either scenario? These will be your strategies, tactical plans, and business rules for third-party paid reimbursements going forward.
5. Pretty much, everything PPACA-related is really contingent on three things:
   1. Exactly what services and conditions will be covered by insurers, and at what rate of payment?
   2. What won’t be reimbursed by insurers?
   3.  How many covered (insured) lives should we expect, by age, gender, ZIP code, and existing/known diagnosis codes?

These facts are facts. Do you have all of them? These metrics are not externally sourced; you already have them in internal data.

6. Next, revisit your state HMO, PPO (as applicable) Medicaid, and worker’s comp and motor vehicle accident reparations acts and their commensurate administrative codes. Review timely payment regulations, all state patient protection acts, definitions of “medical necessity” regulations, medical record copy fees, off-label use of medication, and network adequacy requirements. If you live near a border and attract patients from across state lines, you’ll need to examine both states. (Sorry, those of you on pointy borders with 3-4 corners near you!) Are your contracts a mirror image of the state statutes, administrative codes, or other requirements? Or are they ambiguous interpretations of states’ codes? Are they laden with tacit approvals, such as unilateral changes to provider manuals, that are integrated into the contracts you have?

Fix them now! How to fix them? Get them shored up to at least mirror language, and do away with the ambiguity that is intentionally written into them.

Insurers aren’t the only ones eligible for a “what-if” contingency built into contracts. Providers have far more leverage than they even realize, far more than they have ever leveraged. But if they don’t realize it, they don’t know what to ask for, instead of the boilerplate language. That’s my value proposition. If you did steps 1-6 and you need help with the pushback options, that’s a quick and inexpensive consultation. I do them all the time for clients.

Negotiation is business, not politics.

But as providers, if you don’t hire a consultant to help you strategize and implement or negotiate and you don’t do it yourself, that’s on you, not the PPACA, not President Trump, not Congress, not Justice Roberts, or the court of Appeals.

There is something you can do while you watch and wait for what comes next. Are you ready to do it? Or will you abdicate and complain and place your healthcare organization or practice at risk? That’s up to you!

Program Note:

Listen to Terry Fletcher report on this topic today on Talk Ten Tuesdays, 10 a.m. EST.