Three Issues That Could Significantly Impact Physician Reimbursement in Florida

Jun 20, 2014 at 10:17 am by Staff

Changes to Medicaid reimbursement

Since 2013, qualifying physicians who provide certain primary care services to Medicaid recipients have been eligible to receive Medicare-level reimbursement rates because of the Patient Protection and Affordable Care Act (PPACA). Unfortunately, this provision of the law is set to expire at the end of this calendar year unless Congress extends funding for the program. The expiration of these increased payments is likely to have a significant impact on thousands of Florida physicians. According to a presentation by the Agency for Health Administration (AHCA) at a Florida Senate committee in November, more than 11,500 Florida physicians had taken the steps to receive these increased payments.

Another change that could affect physician reimbursement is Florida’s new Statewide Medicaid Managed Care (SMMC) program, which will shift around 85 percent of Florida’s roughly 3.4 million Medicaid recipients into managed care plans throughout this year. Under this program, physicians and Medicaid managed care plans will negotiate reimbursement rates. However, there is also a new performance standard that plans can meet only by paying physicians at or above Medicare rates for similar services. Plans that don’t meet this performance standard after two years of continuous operation may be fined by AHCA. Because of this new performance standard, physicians who haven’t already negotiated rates that meet or exceed Medicare rates may see their Medicaid reimbursements increase once the SMMC plans in their regions have been operating continuously for two years.

Ongoing efforts to replace the sustainable growth rate and reform Medicare reimbursement

As most physicians are aware, the sustainable growth rate (SGR) is the flawed formula currently used to calculate physician reimbursement rates under Medicare. Originally enacted through the Balanced Budget Act of 1997, the SGR has effectively been overridden by Congress every year since 2002 to prevent increasingly large Medicare payment cuts from affecting physicians. Had the SGR lapsed this year, Medicare reimbursement for physicians would have dropped by roughly 24 percent. Payment cuts of that magnitude could seriously threaten the financial viability of physician practices and reduce access to care for Medicare beneficiaries.

Recently, Congress attempted to repeal the SGR indefinitely and replace it with a new method of calculating physician reimbursement that would eliminate the need to revisit the issue every year. However, despite strong bipartisan, bicameral support, proposals to repeal the SGR ultimately failed because of a lack of agreement on funding. However, there are a few takeaways from the congressional debate that physicians should be aware of.

First, if recent proposals to repeal the SGR are any indication, pay-for-performance under Medicare fee-for-service is here to stay. That is, physicians shouldn’t expect that the pay incentives tied to meaningful use, PQRS and the new value-based modifier that is gradually being implemented will disappear if the SGR is ultimately replaced with something else. Instead, these programs would more than likely be modified and consolidated into a composite score that will be used to calculate penalties and bonuses.

Further, any SGR replacement is likely to heavily incentivize participation in accountable care organizations (ACOs) and other types of so-called alternative payment models (APMs). The proposal that Congress nearly moved forward with would have provided larger annual payment increases for physicians who derive a substantial proportion of their revenue through APMs. So whether the SGR is ultimately repealed or not, the recent congressional discussion of this issue served as one of the clearest signals yet that pay-for-performance programs under Medicare are likely to remain in place or expand over time.

The 90-day grace period

Because of a little-known provision of the PPACA, physicians may not receive reimbursement for some of the services they render if patients who sign up for coverage on the exchange fail to pay their premiums. Patients who sign up for coverage on the exchange and receive subsidies will enter into a 90-day grace period if they fall behind on paying their premiums. During this 90-day grace period, the patient will remain insured so long as he or she catches up on premiums before the grace period expires. However, if the patient does not catch up on his or her premiums by the end of the grace period, coverage will be retroactively terminated. The potential problem for physicians is that if a patient’s coverage were to be terminated under these conditions, the insurer would only be required to pay for covered services that were rendered during the first 30 days of the grace period. The patient’s insurer would not, however, be required to pay for any services rendered during the final 60 days of the grace period. This could substantially increase the risk of bad debt for physicians seeing patients who have signed up for coverage through the exchange.

The statewide impact of the 90-day grace period could be significant as close to 1 million Floridians have enrolled for coverage through the exchange. Of those, the Department of Health and Human Services claims that around 91 percent received a subsidy and could therefore potentially enter into the 90-day grace period if they fall behind on their premiums. So while it is impossible to predict the rate at which this problem will actually occur, the sheer number of patients that the grace period could apply to suggests it is hardly implausible. State legislation that would have addressed this issue by prohibiting retroactive denials in instances where insurance coverage is verified by the patient’s provider prior to the delivery of care failed to pass this year. However, similar legislation aimed at addressing the problem is expected to be reintroduced next year.

Jarrod Fowler, MHA, is Director of Payment Advocacy for the Florida Medical Association and serves FMA member physicians by directly answering their questions about payment issues, healthcare policy and other issues affecting physicians.

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