Webinar: Providers require education on how reform will impact them
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“It’s hard to believe it’s been [13 days] since the President signed the final piece of legislation into law; the passing of the reform legislation really was a watershed moment in the U.S. healthcare system,” said Giniat. “The transformation of the U.S healthcare industry has already begun and the legislation has only accelerated that transformation.”
The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA) are merely starting points for healthcare transformation across the decade, said Eric Federing, executive director for KPMG’s business and public policy group, office of government affairs.
“There are so many triggers in the new laws for subsequent activity that you don’t want to miss any of it as the next couple [to] eight years transpire,” Federing said.
According to Federing, in the future potential considerations can be broken into five groups:
- Technical corrections--such comprehensive legislation is bound to have some technical mistakes that could have some serious repercussions when corrected;
- Legislation that would address findings, reports or studies that are required under the new laws;
- Annual appropriations for any additional public policy adjustments;
- Oversight will be a major point of activity, especially at the federal level; and
- Regulations -- proposal comment periods, rules, final rules, etc.
Giniat also noted that $434 billion will go toward the expansion of the Children's Health Insurance Program and Medicaid. To help finance this, the largest line item comes from a Medicare tax on high-income individuals, he said.
“More importantly, affecting health systems and healthcare organizations are the market-basket updates and the productivity adjustments,” Giniat stated.
In 2019, the estimate is that there will still be 23 million uninsured, according to Giniat. The reform will cover 94 percent of the population, excluding unauthorized immigrants, based on the Congressional Budget Office (CBO) estimates.
The most significant provisions kick in around 2014, Giniat said. “In 2014, the Medicare and Medicaid adjustments are about $42 billion and the industry fees go up to $51 billion, so that’s $93 billion and at that point, per the CBO, that is about the point 20 million newly insured people come into the system.” An additional 12 million people will be newly insured between 2014 and 2017, Giniat stated.
Nationwide, the addition of 32 million newly insured people will not affect hospitals equally, Giniat said. “[P]ressure exerted over the healthcare system [during] the next five years, we believe, could result in additional significant consolidation and the emergence of larger and larger systems, given the issues of access to capital and all the issues of capital going forward,” he said.
“Success will be analogous to transformation sustainability,” stated Brad Benton, who heads KPMG’s U.S. healthcare advisory practice. Providers have to transform but more importantly, as the transformation occurs, they must keep "an eye [on] current execution and longer term execution and be able to establish a transformation framework that will be sustainable as you point towards the future for your healthcare system,” said Benton.
“Most of the burden viewed as ultimate reform will fall on the provider segment,” said Benton. There will be less room for error in the future, with increasing accountability and transparency measures, he said. As healthcare systems begin to evolve to manage the new demand curve, the framework for providing care will need to provide value and be scalable across any number of business initiatives, Benton said.
The demand for capital will be “insatiable” over the next three to 10 years, Benton predicted. “At the end of the day, it may be a survival of the fittest in terms of accessing that capital both in the for-profit and nonprofits sectors.”
In addition, Benton said that the federal interest in health data will spur consequences within the industry--for example, the government might use variability and outcomes data to determine reimbursements and what it will pay for.
“Watch the evolution of health information exchanges [HIEs], especially in terms of those exchanges' ability to be viable and sustainable at the state level," said Benton. Providers should also watch whether and how the federal government supports HIEs where states are not able to have viable financial models to facilitate and drive participation, he said.
"We're going to have to learn how to do a lot more with less," concluded Giniat.