This February, the U.S. government proposed a 0.9 percent cut in payments to insurers for Medicare Advantage (MA) plans for the year 2016. The proposal came as part of a notice issued by a division of the U.S. Department of Health and Human Services that sets premium rate benchmarks for MA plans. The government must cut payments for MA plans under the Affordable Care Act in order to make them on par with Medicare fee-for-service program. This will have a significant impact on U.S. healthcare since MA plans provide health benefits to more than 16 million elderly or disabled people. Let’s take a look at how it may affect insurers, physicians and claim billing.
Insurers May Keep Costs Higher, Benefits Lesser
According to the Reuters report, the payment cut signifies a 1.7 percent increase in healthcare spending as well as payment rates for factors such as health plan quality ratings, health reform costs, and sicker-than-average customers. The report says America’s Health Insurance Plans urged for no cuts to payments as it would cause benefit cuts and higher costs for seniors. In a statement, Aetna said it would lead to exits of some plans from certain geographic markets.
Insurers claim that government cuts last year resulted in a decline of 3 percent or more in payments depending on where the plans were located and how sick their patients were. They were able to negotiate with the government to repeal the initial proposed high percent cut. Either they will have to keep their cost higher and reduce benefits or lobby for changes ahead of the final policy.
Physician Billing May Prove More Challenging
Apart from the measures mentioned earlier, insurers may fire doctors, especially those who charge high, from their networks to offset the payment cuts. Out-of-network providers may have to spend more time and take more effort to receive payments for their services. They may face several challenges including:
- Patient Choice – While patients may consider the reputation of physicians for ‘once and out’ situations (for example, knee replacement), in-network practices are preferred in the case of ongoing care (for example, primary care) for maximum insurance coverage benefit. This kind of diversity in patients’ choices may affect billing and payment of out-of-network providers.
- Out-of-Network Benefits – Physicians need to understand what all out-of-network benefits are provided by the patient’s insurance plan. Sometimes, the reimbursement rates might be high in theory, but may be much lower in practice. Negotiating payments with payers is not an easy task, especially in case of complexities. Obtaining third party billing services may prove to be a good option as most in-house staffs may not be proficient in this area.
- Self-pay Patients – Collecting payments from patients that don’t have insurance can prove really challenging. Patients need to be educated on this and have to be convinced why they are charged a particular amount for services provided.