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Challenges Physicians Can Expect in 2015

published in McAfee & Taft Healthcare Industry Legal Update | January 8, 2015

By Michael E. Joseph and Patricia A. Rogers

Reimbursement for medical services continues to decline. Continuing uncertainty about the Affordable Care Act persists. Government regulations create burdensome paperwork, busywork, and compliance headaches. Technology costs impose a strain on physician practices, and use of technology bogs physicians down. Complicated administrative functions result in poor staff morale. Payers continue to interfere with physician-patient relationships in a variety of ways.

Physicians will need to operate even more efficiently and maintain corporate composure in order to avoid across-the-board disruption in their practices as they help patients to become or remain healthy. Here are some of the key challenges that we believe physicians will face in 2015.

PPACA

The federal health reform legislation will continue to create uncertainty, complicated regulations, and pessimism. The government estimates that three to six million new patients will be covered by insurance provided by health insurance exchanges in 2015. Companies with 50 or more full-time employees (based on 2014 employment levels) must now provide health insurance that meets standards that the government considers fair. The federal government continues to offer incentives for providers to form accountable care organizations, including new proposed rules giving ACOs up to six years to establish performance before paying penalties and a new “Track Three” model, allowing ACOs to retain 75% of the savings to Medicare. Overall, the health reform law will create a growing administrative burden for physicians.

New Payment Models

Payment structures will continue to evolve from traditional fee-for-service to outcomes-based arrangements. New models already include or take into account bundled payments, episode-of-care, shared savings programs, quality reporting, and payment demonstration projects. New variations will emerge. Beginning in 2015, CMS will make “value modifier” Medicare payment adjustments for large physician groups based on CY 2013 quality measure reporting. Medicare will also make additional payments to physicians who provide chronic care management to qualified patients with two or more chronic conditions. CCM payments will reimburse providers for furnishing specified non-face-to-face services to qualified beneficiaries over a calendar month.

Physician Employment by Hospitals

Hospital systems will continue to acquire smaller medical practices, and physicians completing residencies and fellowships will continue to join those systems. Physician autonomy will continue to deteriorate as hospital executives impose administrative burdens, monitor compliance with clinical practice guidelines, mandate protocols to create operational efficiencies, create aggressive budgets, and potentially interfere with medical decision-making. The erosion of clinical and financial autonomy will likely result in physicians leaving the practice of medicine and a decline in medical school enrollment, which will negatively impact access to medical care.  Rising technology costs, along with repetitious and frequently unnecessary collection and compilation of information, will continue to drive physicians out of private practice and into hospital employment. The seemingly never-ending barrage of updates, new programs, and IT staffing changes will place demands on physician time and medical practice resources.

Regulatory Burdens

The enormity of regulatory burdens will tax physician practices and result in low staff satisfaction. Compliance with mandated HIPAA privacy and security practices, ICD-10 transition, the Physician Quality Reporting System, and meaningful use requirements are time-consuming and costly for physician practices. Penalties for non-compliance with regulatory requirements can be very costly, including across-the-board reductions in Medicare reimbursement. Compliance measures mean paperwork and non-clinical busywork, resulting in less time to spend with patients, infringement on patient interaction, and potential harm to physician-patient relationships. Medical practice executives, including practice administrators and financial managers, are exiting the healthcare system to find more rewarding and less stressful positions in other industries and sectors of the economy.

Dealing with Payers

As a result of the Affordable Care Act, insurance companies have made major changes in their policies, practices, and relationships. Some payers have already eliminated physicians from their networks and panels, and further physician panel eliminations are certain to occur. Health plans are mandating that physicians accept all products that they offer. Payers are increasing auditing of physicians’ claims, scrutinizing billing for ancillary services, adopting new medical review policies to deny payment for certain tests and procedures, and prohibiting “under arrangements” relationships with hospitals. Plans have reduced the rates they pay to physicians to keep premiums affordable. Narrow networks result in flooding participating physicians with patients, leaving physicians unable to meet access standards set by plans. Physicians continue to complain that insurance companies dictate important aspects of care, from physician selection to diagnostic tests to medications, but the complaints are louder as insurance companies take more control over patient relationships. Reimbursement from commercial carriers will decline unless physicians vigorously negotiate payment rates. Many physicians do not spend time reading the fine print in contracts, which typically allow health plans to unilaterally amend the contract unless the physician objects in writing within a specific, limited period of time.

Patient Collections

Higher deductibles and coinsurance amounts mean that physician practices have to collect greater amounts from patients before billing payers. Trained, capable billing and collection professionals are in short supply and expensive to hire. Many physician practices resort to “on the job” training, which can be time-consuming and expose the practice to denials, repayments, and recoupments. Government and commercial payers are continually changing the CPT codes that will be accepted for certain E&M visits, procedures, and diagnostic testing. Improving patient collections is a growing cost of a physician practice.

Government Inquiries and Investigations

Increasing numbers of government inquiries and investigations will be initiated in 2015. The OIG’s workplan for 2015 includes auditing of Medicare Advantage payments, medical necessity of diagnostic radiology tests, physicians’ use of place of service codes, and appropriateness of billing for personally performed vs. medically directed anesthesia services. The Department of Health and Human Services continues to rely heavily on its contractors, such as RACs and ZPICs, along with MACs (such as Novitas and Palmetto), to find and collect alleged overpayments using sophisticated data mining. DHHS and its contractors conduct investigations, refer cases to law enforcement, and take administrative actions against physicians and other healthcare providers. Based on alleged violations of the Stark law and federal anti-kickback statute, the Justice Department collected close to $6 billion from False Claims Act cases in 2014. During each of the past two years, over 700 new whistleblower lawsuits were filed. These trends will continue. Both on a state and federal level, authorities, including the DEA, Oklahoma Attorney General, OBNDD, medical licensure boards, and the pharmacy board, are targeting the diversion and over-prescribing of controlled dangerous substances. We expect to see an increasing number of investigations into physicians’ prescribing practices.

Keeping Pace with Technology

Physicians will have difficulty keeping up with the technology necessary to operate a compliant, profitable practice in 2015. Many physicians report dissatisfaction with the EHR they implemented three or four years ago, but cannot afford the hardware, software, and tech support necessary to implement ICD-10, HIPAA electronic security, Medicare quality reporting, billing upgrades, and the myriad of other requirements imposed by government and private payers.

Conclusions

Burdensome developments in the operation of physician practices will continue apace in 2015. Of particular significance will be the ongoing impact of the federal health care reform law, imposition of alternative reimbursement methodologies with anticipated reductions in reimbursement, the increased level of governmental meddling medical practices for regulatory compliance, and the impact of technology in a transitional economy.

If you have any questions about this Alert or if we can assist you with these or any other legal matters, please contact one of the lawyers in our Healthcare Industry Practice Group.

This update has been provided for clients and friends of McAfee & Taft, A Professional Corporation. It does not provide legal advice, and is not intended to create a lawyer client relationship. Readers should not act upon information in this update without seeking professional counsel.