The Affordable Care Act: A primer

Healthcare Reform Navigation

Supply chain success in a post‐reform healthcare market depends on a lot of factors, including a fundamental and thorough understanding of the foundation of healthcare reform. This is part of an ongoing series designed to help The Journal of Healthcare Contracting readers understand the implications of reform.

The current rate of healthcare spending in the United States is unsustainable. Healthcare is currently growing at a rate faster than our economy. In 2011, it accounted for 17.9 percent of our country’s Gross Domestic Product, equaling an annual spend of $2.7 trillion. If we stay on this current path, healthcare spending is projected to grow to over $4 trillion and will be 20 percent of the United States economy by the year 2021.

Enter the Patient Protection and Affordable Care Act, or ACA. The ACA was signed into law on March 23, 2010. After much debate regarding its constitutionality, it was upheld by the United States Supreme Court on June 28, 2012. Many of the provisions for the new law began when it was passed in 2010, with more changes forthcoming.

Many viewed last year’s poorly executed rollout of the online insurance exchanges as a failed ACA. In fact, that only affected one component of the law – the individual mandate for people to have coverage – and that was extended to the end of March 2014. In short, the overall goals of the Affordable Care Act remain the same: To improve the quality of care in our country while reducing the waste and costs associated with that care.

Changes to health insurance
With 50 million – or 16.3 percent – of our population uninsured or underinsured, lawmakers determined there must be significant changes to the coverage available and how we acquire health insurance as a nation.

In 2010, immediately following the ACA being signed into law, insurance providers had to begin limiting the use of annual caps for coverage, meaning they could no longer cap how much a patient can use in a given year. For patients with preexisting conditions, companies could no longer turn down children, and they were required to create high-risk pools for adults, providing coverage for those who did not have access in the past.

The law calls for all Americans to have insurance or pay a fee. Small businesses were scheduled to be given tax credits to cover costs for their employees, beginning in tax year 2010. Uninsured or underinsured patients were given the opportunity to purchase guaranteed coverage through exchanges, or online marketplaces. For those patients who cannot afford care, state and federal governments are working together to expand Medicaid programs.

The result could be as many as 32 million newly insured patients in the healthcare system.

The physician’s role
Because of the ACA, primary care physicians are expected to become the center of care for a large number of patients, helping them understand treatments, coordinate care with specialists, and ultimately manage their local population of patients.

Compensation for all caregivers is likely to change. Until now, physician compensation has been based on a fee-for-service model. This was very test- and procedure-focused, and didn’t focus on the patient getting better. Moving forward, care will be outcomes-based, meaning physicians will be reimbursed higher amounts for keeping patients healthy and out of the hospital or acute-care setting. Caregivers will receive “bundled payments” for a diagnosis and treatment. And there will be a new emphasis on patient education around prevention and wellness.

Steps are being made to reduce medical malpractice and errors, and to implement “comparative effectiveness,” a way to find the most cost-effective way to treat a patient by looking at a direct comparison of existing treatments to determine which works best and which poses the greatest harm.

MDSI – the parent company of The Journal of Healthcare Contracting – has developed the Healthcare Reform Navigation Series, an online program designed to make the task of preparing your organization for 2014 and beyond easier. This series will help you and your team with online courses that explain many of the key elements integral to understanding reform and the transformation from fee‐for‐service to fee‐for‐value. The program includes a 12-month schedule of topics and live sessions with industry experts.

To learn more about the Healthcare Reform Navigation Series, contact Tim Brack, director of training, education and meetings, at 770.263.5270 or