The Affordable Care Act: An Analysis of Its Impact on Urology Practices

Deepak A. Kapoor, MD

Chairman and CEO, Integrated Medical Professionals, PLLC President, Large Urology Group Practice Association.

It has been two months since the Supreme Court of the United States effectively upheld the constitutionality of the Patient Protection and Affordable Care Act of 2010 (ACA). Since that time, opponents of the bill have been analyzing legislative activity to delay or thwart the ACA’s implementation, while the administration and the bill’s supporters have been working to expedite development of the massive government infrastructure required for the provisions of the bill to function. Unfortunately, the ultimate outcome of this political conflict hinges on the outcome of the upcoming general election; thus, the Supreme Court decision does not provide the finality needed for any sector of the healthcare industry to be on solid ground in terms of long-term strategic planning.

For those of us with administrative responsibilities in large urology groups, the dilemma is amplified by the fact that we are affected not only as providers of care but as employers. The overwhelming majority of our practices have greater than 50 employees; those who do not provide “creditable coverage” will face a $2000 per employee penalty. Presently, this minimum (known as “bronze coverage”) will provide for certain essential health benefits (Table 1) and cover 60% of the benefit costs of the plan, with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit ($5950 for individuals and $11,900 for families in 2010). Depending on the policies adopted by an individual state, many of us will be faced with the same uncomfortable decision as other small businesses: It may be economically advantageous for us to cease offering health insurance as an employee benefit and pay the penalty, effectively forcing our staff into Medicaid-run state insurance exchanges.

Table 1. Essential Health Benefits as Presently Defined

Ambulatory patient services

Emergency services

Hospitalization

Maternity and newborn care

Mental health benefits

Substance use disorder services

Prescription drugs

Rehabilitative and habilitative

services and devices

Laboratory devices

Preventive and wellness services

Chronic disease management

Pediatric services, including oral

and vision care

Furthermore, there is absolutely no question that surgical specialists, urologists in particular, do not fare well under the provisions of the ACA. For hospitals and insurance companies, reductions in premiums and/or reimbursements are to be offset by decreases in the number of uninsured patients; insurance companies will have more customers, and hospitals will presumably have to provide less indigent care. As there is approximately $700 billion to be cut from the Medicare program under the ACA, any specialty with a high percentage of Medicare beneficiaries will be disproportionately adversely affected by these changes. As most large urology groups have Medicare populations that account for 45% to 55% of their total patients, these cuts have a potentially drastic negative impact on reimbursements. To be fair, those practices with a high percentage of uninsured patients will obtain some relief, but this is unlikely to offset the losses in Medicare reimbursements. Furthermore, primary care physicians participating in Medicaid-run insurance exchanges are afforded protection under the ACA, as certain codes referable to their specialty are guaranteed enhanced reimbursement; urologists are afforded no such assurances.

Another profound change that affects large groups is the development of Accountable Care Organizations (ACOs). Simply put, an ACO is an organization that, through a variety of criteria (Table 2), internally manages utilization and outcomes for a given subset of Medicare beneficiaries. In return, the ACO is eligible to receive a portion of any cost savings realized by the Medicare program, and ultimately will be penalized for any cost overruns. Although modifications in the ACO regulations now permit specialists to participate in multiple ACOs, there is no question that the design of the regulations significantly favors hospitals and multispecialty groups that incorporate primary care physicians; an inherent risk to this model is the development of healthcare oligarchies that will ultimately stifle competition and increase costs. On the other hand, one collateral benefit of the ACO initiative is the recognition that it is necessary for any organization that assumes risk to control both the quality and utilization of a variety of ancillary services, which extends to specialty organizations that may be able to provide case rates or episodes of care to ACOs. This has reduced the legislative and regulatory appetite for expansion of Federal Stark self-referral legislation, as at-risk entities control costs of ancillary services by internally referring these services. Recognition of this led the Medicare Payment Advisory Commission (MedPAC) to acknowledge in its March 2010 Report to Congress that integrated medical practices “could be well-positioned to succeed under a new payment model.” As the regulatory infrastructure governing the behavior of ACOs is murky at best, it remains to be seen whether these potential advantages will outweigh the risks associated with widespread consolidation of medical services.

Table 2. Requirements of an Accountable Care Organization as Delineated in the ACA

Assume accountability for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it.

Enter into an agreement with the Secretary to participate for no less than three years

Have a formal legal structure that would allow the organization to receive and distribute payments for shared savings to participating providers of services and suppliers.

Include primary care ACO professionals that are sufficient for the number of Medicare fee-for-service beneficiaries assigned to the ACO under subsection

• In order to be eligible to participate in the ACO program, the ACO shall have at least 5000 beneficiaries assigned to it.

Provide the Secretary with information regarding professionals participating in the ACO as the Secretary determines necessary to support the assignment of Medicare fee-for-service beneficiaries to an ACO, the implementation of quality and other reporting, and the determination of payments for shared savings. The ACO shall have in place a leadership and management structure that includes clinical and administrative systems.

The ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies.

The ACO shall demonstrate to the Secretary that it meets patientcenteredness criteria specified by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans.

The impact of the many regulatory changes will vary in different markets depending on the population density, the demographics of the population, the number of hospitals, and the availability of specialists. One component of the ACA that has profound and potentially devastating impact on a national level is the activity of the Independent Payment Advisory Board (IPAB). This panel consists of 15 members, all of whom must be full-time (no practicing physician need apply), and only a minority of whom (by statute) can be healthcare providers. As the specific language of the bill prohibits IPAB from recommending healthcare rationing, changes in Medicare benefits, or revision of eligibility standards, its only tool is to reduce payments to providers. There are two components to IPAB that are particularly dangerous: (1) IPAB has the ability to create Medicare payment policy around arbitrarily determined budgetary guidelines that have the potential to automatically become law without the possibility of administrative or judicial review; and (2) hospitals and certain other entities such as nursing homes are exempt from IPAB recommendations until 2019 (implemented 2020); thus, 100% of all Medicare reimbursement cuts for 5 years are to physicians, pharmaceutical companies, and device manufacturers! In addition, the regulations governing IPAB make repealing this provision very difficult because it draws its resources directly from Medicare trust funds—even the traditional method of Congress starving an agency’s budget won’t work. Without question, because of the disproportionate financial burden placed on providers, IPAB is the component of the ACA that poses the greatest threat to urology group practices, and on a broader note, the independent practice of medicine in general.

Regardless of the outcome of the debate surrounding the implementation or repeal of the ACA, one thing is certain: The historical practice of medicine as we once knew it will soon cease to exist. There is a clear push away from traditional fee-for-service medicine toward models that require significant infrastructure to deliver; thus, healthcare ultimately will be delivered by fewer, larger providers. When these pressures are added to the byzantine regulations and unfunded mandates that accompany implementation of a bill that governs onesixth of the US gross domestic product, it is doubtful that individual or even small group practices will long be able to survive.

However, given the nature of urology as a specialty, large integrated urology group practices may find a niche in the market by providing comprehensive specialty services to a number of larger providers, as well as directly contracting with the government and other thirdparty payers. In addition, as large urology groups generally have welldeveloped central management, the opportunity exists to provide such services to physicians of other specialties that are seeking an alternative to hospital employment. By developing innovative, comprehensive care models that enhance access, improve outcomes, and reduce costs, large integrated urology groups are uniquely positioned to not only survive, but to thrive in the brave new healthcare world.