provider payments face short-term local cuts, long-term federal cuts
By Mulvany, Chad | |
Proquest LLC |
In the near term, gridlock in
Because of the electoral calendar, gridlock, and shrinking near-term deficits,
Providers should use this brief window of relative stability to focus on reducing their cost structures to sustainable long-term levels.
In the Near Term
In a departure from what we have seen over the past few years, the federal government isn't facing an annual budgetary or funding crisis. Neither political party wants to risk a repeat of last fall, when gridlock over the federal budget resulted in a government shutdown, before the upcoming midterm elections. As a result, it appears that both the
Further, a deal earlier this year suspended the debt ceiling through
With only special elections to
Another reason for the reduced likelihood of payment cuts at the federal level is that the parties seemingly have reached an ideological stalemate as to how to tame deficits that are likely to persist at least through 2016. The menu of options to reduce the deficit has been well-established through previous fiscal crises and budget negotiations. However, neither side has shown an inclination to make the compromises needed to reach a sweeping deal, limiting the possibilities for a grand bargain that includes significant changes to entitlement spending when the debt ceiling needs to be raised next spring.
What Providers Can Expect
In the near term, providers are likely to feel more pressure from employers and state
Historically,
From
An SGR fix-either shortor long-termlikely will require an offset to other provider payments. Republicans and Democrats in both chambers of
Federal Cuts Seem Inevitable
In the longer term, significant reductions to
The CBO outlines the challenges in its February report:
"[FJuture spending projections are boosted by an aging population, the expansion of federal subsidies for health insurance, rising healthcare costs per beneficiary, and mounting interest costs on federal debt. By contrast, all federal spending apart from outlays for
Put plainly, at some point in the near future.
Implications for Providers
In conversations with HFMA. many health system leaders have expressed concerns that, between the anticipated compression of commercial plan rates and the changes to public healthcare programs (both rate cuts and a shift to value-based payment), they will need to reduce their cost structures between 20 and 3o percent. These leaders believe their organizations can achieve between a third and one half of the necessary margin improvement from traditional measures: more accurate documentation and coding, increased revenue cycle efficiencies, improvements in the supply chain and purchased services, and better labor management. They think these steps will give them at most three years of breathing room.
After that, the opportunities for margin improvement lie in eliminating unnecessary variations in clinical care delivery. Organizations should use these next two years wisely to develop strength in clinical and financial leadership while simultaneously building the business intelligence and process improvement capabilities that will allow them to identify and eliminate unnecessary variation. These changes will improve patient outcomes and the cost-efficiency of care delivery, providing the margin improvement necessary to be sustainable. *
a. Mulvany, C., "Driving Cost Control," hfm,
b.
c. "State 'Accountable Care' Activity Map,"
d. Miller, D., 'Medicaid Spending,'
Copyright: | (c) 2014 Healthcare Financial Management Association |
Wordcount: | 1369 |
responding to an insurer’s recoupment of past payments
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