Amid the political firestorm over U.S. healthcare reform, one point has been ignored: the reaction of healthcare payors. That's a major oversight because imaging providers run the risk of getting buried as payors retrench, according to a presentation at the American Healthcare Radiology Administrators (AHRA) annual meeting being held this week in Washington, DC.
Healthcare reform scares insurers, and that fear could cause them to respond in ways that could dramatically affect radiology practices, said Ron Howrigon, president and founder of Fulcrum Strategies in Raleigh, NC, a company that provides physician consulting services. And not much national discussion is being given to the side effects of the legislation, which could be further bad news for radiologists.
"Physicians aren't really at the [discussion] table," Howrigon told AHRA attendees. "And because doctors aren't at the table, there might not be much left for them to eat."
This could be bad
Insurance companies may respond to healthcare reform by discontinuing their insurance products, Howrigon said.
"Insurers view this reform as a bad thing," he told AuntMinnie.com. "And if the business a company is in becomes unprofitable, the company drops it."
What are the ramifications? Payors don't have much incentive to offer full insurance, according to Howrigon. Don't be surprised if companies long associated with healthcare coverage begin to move into other lines of business.
"It has the effect of making the fully insured market pretty distasteful to insurance companies," he said. "And they don't have to offer that product. Sure, if they drop it, they may be smaller, but if something isn't profitable, why try to sell it? The gist of this is that healthcare reform may have created a marketplace for insurance companies that is so difficult to thrive in that they won't want to sell insurance anymore."
Howrigon told attendees that these companies may begin experimenting with dropping full insurance products in particular states or counties that are tough markets. They may also drop Medicare Advantage products and follow Medicare's example by removing consult codes and conducting more fraud and abuse audits.
In fact, with the economy where it is now and a high unemployment rate, offering health insurance as an employee incentive looks less appealing. Even with the penalty the healthcare reform legislation will levy on companies that don't provide their employees with insurance, dropping the program could be more cost-effective.
"The marketplace isn't going to sit still [in the face of healthcare reform]," Howrigon said. "And I don't think we're going to like how insurance companies handle this."
Prepare now for reform fallout
If radiology practices haven't yet done so, it's time to review managed care contracts and plan proactive ways to engage in negotiations while all this is playing out, Howrigon said. He encouraged AHRA attendees to negotiate managed care contracts assertively. Pay special attention to fee schedule descriptions, amendment provisions, termination terms, and billing policies, he said.
"If, in fact, payors are getting nervous about how all the reform legislation will play out, you need to know how protected you are in your contracts," he said. "Renegotiate the contracts and try to get them locked in for a year or two with protections, just like you might refinance a home loan at a lower rate."
It will be crucial for radiology practices to take a serious look at their current business model -- everything from payor mix to patient capacity to facility planning, Howrigon advised. Both imaging centers and hospital-based facilities should evaluate their current profitability and run scenarios with a change of payor mix. If more Medicaid patients flood the system, will the facility still be viable? What if several large healthcare insurance companies drop that business altogether, or if employer groups start to have higher deductibles?
And here's another kicker: At least 20 states have filed lawsuits against the reform bill, claiming that it's unconstitutional under the argument that the government can't mandate that individuals buy products (i.e., health insurance), and it can't expand Medicaid -- which partly relies on states' money -- without states' permission. So what happens if these suits gain traction?
"The healthcare reform legislation doesn't have a severability clause in it," Howrigon said. "It's an all-or-nothing law -- lawmakers can't strike particular parts from it. If any of these suits filed by individual states go to the Supreme Court and the law is deemed unconstitutional, the whole thing will drop dead."
So radiology practices find themselves in a tricky position: having to be vigilant and proactive but also flexible, according to Howrigon.
"I've heard a lot of people on the imaging end saying, 'This reform will bring in more patients, so we'd better start building more facilities,' " he said. "But there are so many unknowns as to how this will be implemented over the next two to three years that if a facility can avoid making big strategic decisions until there's more information, that's better."
By Kate Madden Yee
AuntMinnie.com staff writer
August 25, 2010
Related Reading
Life after healthcare reform: Tracking finances proactively, May 20, 2010
Life after healthcare reform: Good, bad, and ugly, May 13, 2010
Obama signs final healthcare changes, defends law, March 30, 2010
Healthcare changes head to Obama for signature, March 26, 2010
Final answer on equipment use rate: 75% in 2011, March 26, 2010
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