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Top 4 Policy Changes Affecting the Health Payer Market in 2015

In 2016, as much as 30 percent of Medicare reimbursements are expected to be in the form of alternative payment models.

By Vera Gruessner

- The last year has had a huge impact on the health payer market as well as the entire healthcare industry from providers and educational institutions to the federal government and the patient community. Below we will outline the top four policy changes that the health payer market has had to implement throughout 2015.

Health Insurance Marketplace

Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 

In April of 2015, the federal government repealed the Sustainable Growth Rate (SGR) formula and passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This means that both providers and payers will continue adopting value-based care payment models.

There are two main protocols that payers and providers will have to choose between. These are the Merit-Based Incentive Payment System and the Alternative Payment Models. This new legislation will have a big impact on the health payer market precisely due to the fact that it has abolished the SGR formula.

Previously, the SGR formula has led to reimbursement cuts among Medicare providers and excessive Congressional spending on temporary fixes to the problems of the flawed Sustainable Growth Rate formula. The Commonwealth Fund stated that the SGR formula was essentially a barrier to real payment reform throughout the health insurance marketplace.

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“Although the connection between payment and delivery reform and cost savings has not been definitively determined, both national health expenditures and Medicare spending have slowed considerably at the same time that these reforms have gained momentum in both the public and private sectors,” the Commonwealth Fund reported.

The Medicare Access and CHIP Reauthorization Act, however, has a stronger focus on healthcare payment reform including rewarding high-performing providers such as patient-centered medical homes and Accountable Care Organizations (ACOs).

The October 1 ICD-10 implementation deadline

Earlier this year, the entire healthcare industry has had to implement a new diagnosis coding system called ICD-10. While the previous coding system, ICD-9, had been used since the 1970s, the new platform will take some getting used to for both healthcare providers and the health payer market.

Even though healthcare facilities have had a few years to prepare for the October 1 ICD-10 implementation deadline, several days before the date many still feared that there could be reimbursement delays and twice as many claim denials, reported.

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Nonetheless, it seems that all of the staff trainings, new software implementations, and backup plan strategies has allowed the ICD-10 transition to be as successful as possible. About one month after the October 1 deadline, the Centers for Medicare & Medicaid Services (CMS) announced that claims are processing normally and no major issues have been found.

The analytics for Medicare fee-for-service claims show that only 0.09 percent of 4.6 million claims submitted daily were rejected because of incorrect ICD-10 codes while 0.11 percent were rejected because providers were using ICD-9 codes. Clearly, the health payer market has fared successfully with the ICD-10 implementation.

CMS pushes value-based care payments for Medicare reimbursement

Starting in January of 2015, the Department of Health and Human Services (HHS) along with CMS have been establishing goals in favor of value-based care among Medicare reimbursement.

According to a press release from HHS, in 2016, as much as 30 percent of Medicare reimbursements are expected to be in the form of alternative payment models. The goal is to make sure that Medicare providers are receiving payments for value-based, quality care instead of through a fee-for-service payment model. The federal agency is aiming for quality instead of quantity when it comes to healthcare services.

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“Today, for the first time, we are setting clear goals – and establishing a clear timeline – for moving from volume to value in Medicare payments,” HHS Secretary Sylvia M. Burwell said in a public statement. “In alternative payment models, providers are accountable for the quality and cost of care for the people and populations they serve, moving away from the old way of doing things, which amounted to, ‘the more you do, the more you get paid.’”

Additionally, HHS plans to move toward 50 percent of Medicare providers to receive reimbursement based on alternative payment models by 2018. While these goals may not be set until the following years, they are definitely impacting the health payer market in 2015 as providers and insurers move toward implementing new payment models like bundled payments within their organizations.

Mental Health Reform Act of 2015

In early August, Senators Chris Murphy (D-Conn.) and Bill Cassidy (R-La.) introduced a bill in front of the Senate floor called the Mental Health Reform Act of 2015. With so many mentally ill individuals not receiving the care they need today and ending up homeless on the street or stuck in jails and prisons, it is high time that the federal government and healthcare industry focused on adopting protocols and legislation to take better care of the country’s mentally ill citizens.

The Mental Health Reform Act of 2015 aims to develop better relationships between mental health professionals and primary care providers in order to strengthen individual and family care, according to The Hill. The legislation addresses privacy and security concerns while also stressing the importance of telehealth implementation in the treatment of mental health conditions.

“The bill provides reforms on the federal level that will further improve services. We can no longer tolerate jails and prisons as ‘de facto’ mental health care. By restructuring and elevating federal mental health programs, the identification and dissemination of best practices and evidence-based models will improve and be easily shared across the federal system,” Senators Chris Murphy (D-Conn.) and Bill Cassidy (R-La.) wrote for The Hill.

“We also tackle head-on the paralyzing problem of a system that simply doesn’t have enough inpatient or outpatient capacity to deal with the number of people with mental illness living today in America.  Our bill changes an outdated reimbursement system so that hospitals can open more short term inpatient psychiatric beds for individuals in crisis, and primary care physicians can open up practices right next to mental health professional and not be penalized for coordination.”


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