Online Marketplace

 

Advertise here

Payment Systems and Insurance Reimbursement Reform

Matthew Katz, MS, Fraser Cobbe

Government involvement

The dramatic downturn in the economy will have significant ramifications for the healthcare industry. While the 2006 AAMSE Trends report indicated “the number of eligible beneficiaries will continue to grow in all government health programs” the report was issued long before the extent of the economic slowdown materialized. In addition to the ongoing concerns with the aging population, the economic realities facing the population will rapidly accelerate the dependency on government programs. Larger unemployment and budget-strapped employers dropping coverage for employees will drive larger numbers to seek coverage through government programs. Citizens may also struggle to meet their obligations for co-payments and deductibles even in government programs due to lower earnings. Governments, both State and Federal, will face tough decisions coping with financing a larger percentage of health care rendered.

Trends:

• The increased number of eligible beneficiaries and the increased cost of the services provided will strain the government’s ability to tax and citizens ability to pay for these services(1).

• The public-funding sector will most likely retreat to providing only minimal public health services, leaving gaping holes in the safety net for the lower-wage recipients and their families.
  

• State and Federal Governments will consider decreasing reimbursement for all providers or institute utilization controls as they struggle to finance a larger share of the care rendered.

• Retirees and other government assistance-eligible patients will take on a greater burden for their share of cost with decreasing income and availability of employer sponsored health benefits and pensions.

Insurance Marketplace

The trend towards great patient responsibility in their insurance coverage will continue to accelerate. As healthcare costs continue to climb and the nation faces an economic crisis, patients will be asked to take on a greater share of responsibility for their health care including higher deductibles and co-pays. The trend toward eliminating mandates from insurance policies and provide patients greater “cafeteria style” insurance coverage will continue to grow. The emergence of these plans will provide a significant challenge for physicians to understand the coverage limitations of their patients.

Trends:

• Increased patient responsibility thru high-deductibles, larger co-pays, and health savings accounts.

• Promotion of real time adjudication of claims will lead to greater focus on prior authorization and time of service payments.

• Elimination of mandates and increased cafeteria-style insurance coverage will pose significant challenges for patients and physicians alike as they attempt to understand the limitations of coverage(2).

• Increased calls for association programs or group purchasing organizations that can bring together individuals, associations, and small businesses to leverage their collective size to receive more favorable health insurance premiums that are typically reserved for large employer groups.

• With a declining economic situation, it is expected more children and others will receive their health care services through government programs, including Medicaid and SCHIP.
  

Private Public Partnerships (Quasi-Governmental)

The demand for Private Public Partnerships has increased as the governments look to share the burden of increased financial responsibilities for health care with the private sector. These partnerships often involve a shared responsibility for the provision of care. The fragmentation of responsibilities can be complex and difficult for patients and physicians to navigate.

Trends:

• State and Federal Governments will look for additional opportunities to lower costs by utilizing the private sector to assist in the administration of government programs.
  
  
• Increased utilization of supplemental plans that assist patients in covering their share of cost borne through co-payments and deductibles.
  
  
• Patients and physicians will continue to be burdened with a myriad of reimbursement and coverage rules for these partnerships.
  

Consolidation in the Private Marketplace and Public Administration

The past decade has seen a dramatic consolidation in the private marketplace with large national insurance carriers absorbing smaller local and regional carriers in an attempt to expand market share. The Federal Government has also decided to consolidate the administration of the Medicare program by contracting the state fiscal intermediaries into thirteen regional Medicare Administrative Contractors. Many of the large insurance companies have been awarded the regional contracts for the administration of the Medicare program. This consolidation greatly enhances the role of a few large corporations in the provision, administration, and payment of care for large percentages of the population.

Trends:

• Consolidation of Medicare Administrative Contractors will lead to the development of multi-state reimbursement policies (Local Coverage Determinations), less local customer service, and decreased importance of local medical community input in the administration of the Medicare program.

• Large corporations and their subsidiaries will dominate significant patient populations in geographical areas across the country.

• Health care providers and patients may have a diminished capacity to interact and negotiate with these large corporations.
  

1 Center on Budget and Policy Priorities, The Effect of Increased Cost-Sharing in Medicaid: A Summary of Research Findings b Leighton Ku and Victoria Wachino, July, 7 2005

2Merlis, Mark, Gould, Douglas, and Mahato, Bisundev, Rising Out-of-Pocket Spending for Medical Care: A Growing Strain on Family Budgets, Feburary 01, 2006