Ten Steps for Surviving ARRA and ACA Requirements in 2014
By Dick Taylor, MD
The 2009 American Recovery and Reinvestment Act (ARRA) changed the healthcare IT landscape for providers by offering money in exchange for the adoption and implementation of electronic medical records. One year later, the Affordable Care Act (ACA) upped the ante with new regulations for privacy, accountable care, and insurance coverage. The combination of the two acts has left most providers and provider organizations struggling to see the forest through the trees as we enter 2014, and the deadlines for both acts draw ever closer.
Controversial from the start, the Affordable Care Act (ACA) was landmark legislation three years ago. It remains front and center after being tested by the Supreme Court, a presidential re-election, and most recently, a government shutdown. Like the ARRA, much of it is yet to be written, requiring tens of thousands of pages of regulations to explain the details. Like the ARRA, it is deeply flawed in places and will require many years of refinement.
The ACA tries to supercharge the required transition from a reactive, episodic care based payment system to one that might reward preventive care, wellness, and patient outcomes. Providers generally see the promise, but they almost universally question the ability of the law to achieve its outcomes, particularly in light of modern medicine’s rapidly changing cost factors.
Healthcare is getting more expensive, and the healthcare IT transition mandated by the ARRA has not yet reached the break-even point for expense control for many (if not most) provider organizations. Demand is down in many segments, particularly for inpatient and elective procedures, and margins are under heavy pressure.
To make matters worse, regulatory oversight is rising and is highly unpredictable. As an example, on September 1, 2012, CMS finalized a rule that gave eligible providers until July 1, 2014 to begin attestation for Meaningful Use. Up to that point, providers generally believed that they had 15 months longer. In contrast, the ICD-10 implementation date was arbitrarily delayed a full year in August 2012 from October 1, 2013 to October 1, 2014. Regulatory changes of this nature are difficult to predict and require both flexibility and preparation from providers.
As we enter 2014, the final sprint toward ARRA and ACA’s deadlines, surviving this environment will require providers to focus on achieving the following goals over the course of the coming year.
- Reduce expenses, both per-patient and fixed overhead. Admittedly, this is easier said than done.
- Where practical, grow larger through acquisition or affiliation. This spreads fixed overhead over a larger patient volume and allows much more efficient team-based and whole-patient care. Growth must however, be calculated and managed to capture these savings. Rapidly growing organizations must be especially watchful to avoid operational and cultural traps.
- Achieve Meaningful Use and avoid ARRA Medicare penalties. Providers who have missed Meaningful Use to date are now looking at reduced awards and penalties (amounting to small but significant percentages of CMS billing) beginning in just over a year.
- Achieve ICD-10 compliance on time (by 10/1/14) without destroying the organization. While ICD-10 is critical (not billing with ICD-10 is simply not survivable for most providers), this has become the Y2K for healthcare. Caution, particularly around involving physicians and mid-level providers in the minutiae of coding, is strongly advised.
- Pursue transparency for quality outcomes and cost. Payors, employers, and patients are all watching these very carefully, and organizations who are not forthcoming will become less favored over time.
- Pursue transformation in long-term healthcare, including population health, chronic disease management, and wellness. Fee-for-service is likely to become far less sustainable as a primary business model over time.
- Reduce clinical variation, both by pursuing good evidence (where available) and by achieving agreement on leading practices among providers. Much of the variability in clinical care is not associated with improved outcomes and some of it is actively harmful, both in cost and patient outcomes.
- Recognize and honor the risk you own. Health systems have always owned the risk for charity and self-pay patients. The ones who recognize and accept this are much more likely to provide good care and keep costs under control.
- Look for whole-patient (“accountable”) care opportunities within your own orbit. While the ACA set out the framework for Accountable Care Organizations, the reality is that these are still embryonic. Organizations that begin at home will be ready for risk-sharing moving forward.
- Treat your IT expenditures as long-term investments, not expenses. Organizations should expect to spend an increasing percentage of capital dollars building technology assets. Acquire standards-based IT assets that will stand the test of time. Expect, plan, and capture the hard- and soft-dollar returns from them. Organizations that view IT simply as an expense will forego future profits in the pursuit of short-term efficiency.
Dick Taylor is managing director and chief medical officer of MedSys Group of Plano, TX.