The Least Surprising Impact of the Affordable Care Act: Lower Pay For Physicians

The Wall Street Journal today reports on one of the impacts on the Patient Protection and Affordable Care Act that should have been viewed by all as the most expected repercussion — lower commercial reimbursements to physicians.

The article first focuses on reduced payments from UnitedHealth Group. Contract amendments sent to some New York City physicians are bringing UnitedHealth's rates closer to the state's Medicaid program, according to the report. WellPoint is also mentioned. One physician declined a contract from the payer's Anthem unit, calling the rates "not what a reasonable person would consider acceptable."

The WSJ report reinforces anecdotal observations about payments under the exchange plans so far. Christopher Kerns, managing director with The Advisory Board Company in Washington, D.C., says he's been hearing commercial rates under the typical exchange plan are a single-digit point above Medicare rates, which generally cover 85 to 95 percent of fully allocated costs. The typical employer-sponsored commercial plan typically covers about 130 percent of those costs.

Blue Shield of California is also mentioned in the report. Earlier this year it sent physicians a contract amendment if they wanted to opt in to treat exchange patients. Under that plan, the payer would provide up to 30 percent less than their normal commercial rates. A spokesperson for the payer told the WSJ too few physicians agreed to the change in some mostly rural areas, and Blue Shield had to agree to continue usual rates for some physicians.
The overall impact of the law may be that it does drive down costs, if enough physicians join exchange plans, but it is not likely to actually improve access to providers or quality of care. The PPACA also may make more payers essentially closed systems. That is, to actually control their costs they will need to develop networks that are large enough to reduce or prevent payment for out-of-network for services. Many plans on the exchange are HMO-style closed networks.

The amount of downward rate pressure physicians will face from payers ultimately depends on how many people enroll in the exchanges. This is what will give payers leverage, and so far enrollment has been lower than expected. Some health plans continue to offer physicians the same rates as before, according to the report. But if enrollment spikes, they may return to negotiations.

There are a great number of clearly expected consequences from the PPACA. Reduced payments to physicians are one many people saw coming. Then there are the law's unintended consequences, of which there are several.

One is patients having more financial "skin in the game" as their employers move to high-deductible health plans. This will place a greater collection burden on providers, as hospitals' average recovery rate for collections is a little more than 11 percent. Non-hospital providers average about 17 percent. This issue will compound the reduced rates they face under commercial plans on the exchange.

More Articles on the Healthcare Exchanges:

Poll: Only 18% of Uninsured Have Visited PPACA Exchange Site
Poll: Most Uninsured Not Happy With Exchange Site Experience
5 Key Findings About PPACA Federal Exchange Health Plan Offerings

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