Fast-Tracked Health Care Reform May Have Little Impact on ARM Industry in Short Term

When Democrats reportedly reached an agreement last week to use a Senate procedural process called reconciliation to prevent a filibuster of health care legislation, it was further evidence that health care reform was being fast tracked and system changes may be coming before year’s end. Now that former republication Sen. Arlen Specter of Pennsylvania has become a democrat, at least one health care policy expert says reform legislation could happen as early as this summer. 

“I think once the bill is out, it will move as fast as they can so as to give opponents as little time as possible to get their acts together,” said Henry Aaron, senior fellow on health care with the Brookings Institute.

When, and if reform comes, ARM professionals who manage health care account receivables have little to fear in the short term because co-pays and deductibles will continue to be a reality, said Adam Peterman, ACA International’s director of government affairs.

“I don’t think much will change,” Peterman told insideARM. He said the longer term impact on health care receivables managers and collectors will depend on whether a single payer health care system emerges from any new competitive landscape that includes a government subsidized plan.

“If government is the only entity providing and billing health, it will probably do all the rest on its own rather than using the commercial market,” Peterman said.

With more businesses supporting health care reform and private insurers saying they won’t deny coverage to people with preexisting conditions if lawmakers require everyone get insurance, many health care policy experts doubt a single payer system will take hold.

“I don’t think anyone seriously believes there will be a single payer system,” said William Galston, senior fellow in governance at the Brookings Institute. Health care facilities analyst Jason Gurda agreed, saying a payer system that sets reimbursement rates similar to Medicare and Medicaid, rather than one that negotiates rates, would set up many hospitals to fail.
 
“It would mean significant reductions in reimbursement for those hospitals,” Gurda said. “Hospitals are a highly leveraged industry. It takes time for that industry to reduce cost structure. If you cut away (reimbursements), you would send many of those hospitals into default.”

Galston said what’s more likely to happen is that federal lawmakers will adopt a health care reform strategy similar one adopted by Massachusetts or use it as a basic model if they can find a way to pay for it. In 2006, Massachusetts passed a law requiring nearly every resident to obtain health insurance, partially or fully subsidizing those who can’t afford it (“Massachusetts Health Care Reform has Intended Effect for Most Hospitals,” Feb. 14, 2008).  Last year, state lawmakers took on cost containment, passing legislation that set deadlines for electronic records compliance, standardized billing and coding, and they gave physician assistants and nurse practitioners the right to serve as primary care providers.

Although the state offers a public plan for low-income residents, it is managed by private insurers who negotiate reimbursement rates with health care providers, said Dan McHale, health care finance director for the Massachusetts Hospital Association.  Businesses and employees cannot opt out of any employer plan, individual or other public health plan they provide or may be eligible for without facing significant penalties, he said.  

Although enrollment in Massachusetts’ public insurance plans has increased, private insurers saw the single largest enrollment increase, including a nearly 150,000 increase in employer-based enrollment, McHale said.  Nearly 98 percent of state residents are now insured and Massachusetts hospitals’ uncompensated care volume declined more than 36 percent since the health coverage was mandated, McHale said.

Gurda said if federal lawmakers reach an agreement on health care reform it is unlikely everyone will be required to get insurance immediately. “That’s a difficult policy to pass during a recession.  One possible strategy is a phased-in expansion of coverage over a three or four year period,” he said.  “In that case, it may not reduce bad debt levels at all right away.”