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Post-Election Update Regarding the Affordable Care Act

November 9, 2012 | Comments Off on Post-Election Update Regarding the Affordable Care Act
Posted by Frank Ciesla

With the election behind us, it is clear that the implementation of the Affordable Care Act (ACA) will move forward.  It is also clear that the country is faced with a significant fiscal deficit and that steps, whether it is a grand compromise or characterized in any other way, will have to be taken to respond to that deficit.  The ACA was structured in such a way that a significant number of regulations and implementing provisions of the ACA were to occur in 2013.  As these regulations are published, providers must review them for the impact upon their ability to deliver services to their patients both from a fiscal point of view and from an operational point of view.

In addition, the Sustainable Growth Rate is currently scheduled to be implemented on January 1, 2013, which will result in approximately a 30% cut in physician reimbursements under Medicare.  As in every other year before this one, it is likely that this will be postponed at least for another year.  The Congressional Budget Office projects that the cost of postponing the cut for 2013 will be about $40 billion and the cost for postponing the cut in 2014 will be $61 billion.  The current projected deficit assumes the implementation of the Sustainable Growth Rate, and therefore postponing the Sustainable Growth Rate for 2013 will add $40 billion to the proposed deficit and postponing it again through 2014 will add another $61 billion to the deficit.  At this point, it is not clear as to the reaction of both the Congress and the President in handling the Sustainable Growth Rate for 2013.

In addition, it appears from a number of statements that have been made over last year, that reductions in Medicare will be part of the grand bargain.  It is also clear from the ACA that the philosophy of the ACA is not to reduce services to Medicare beneficiaries.  That leaves few options–either raise premiums for Medicare to the beneficiaries or reduce the payments to the providers.  At this point, it is too early and leaves only speculation as to the both.  However, providers should be careful in implementing programs in which they are committing funds, with respect to the uncertainty as to whether or not they will receive adequate reimbursement to recover those investments.

As regulations are implemented and their impact upon providers becomes clearer, we will continue to provide our analyses through this blog.


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