Healthcare Reform: What Does Change Mean for the Industry
The only constant in healthcare is change. Legislation on the national and state levels continues to reform healthcare. There are many moving parts, but, regardless, we are witnessing an evolution. Thus, it is important for healthcare providers and professionals in the industry to keep up.
On a national level, the drive toward value-based care (hospitals and physicians being paid based on patient health outcomes) is solidly underway. Both Medicare and private insurers are aligning reimbursement with quality metrics rather than paying based on volume alone. The Tax Cuts and Jobs Act (TCJA) also brought about significant change to the healthcare industry. TCJA slashed rates for those companies that are organized as C corporations. However, it specifically excluded most practices that operate as pass-through entities.
Closer to home, out-of-network providers in New Jersey are dealing with onerous new regulations. Those looking to branch out into telemedicine have draft regulations to guide them. Lastly, New Jersey became the second state in the country to require individual health insurance mandates.
Here are some specific updates to what healthcare reform currently looks like:
- Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The Act, which changes the payment system for doctors who treat Medicare patients, continues to evolve. The 2018 final rule increases the data completeness requirements and begins to assess providers on cost measures. The penalties for non-compliance continue to increase. In 2018, more providers qualified for Advanced Alternative Payment Models (APM), allowing more practices to enter risk-based programs. The comment period for the 2019 final rule ended in September 2018, and the final rule should be published before year end. Private insurers are following suit and developing their own risk-based and quality programs.
- Tax Cuts and Jobs Act. In large part, the TCJA ignored those that practice as pass-through entities. Those that file joint returns with taxable income under $415,000 may qualify for a benefit. Practices that are organized as C corporations do benefit from the TCJA. The flat tax for personal service corporations is reduced from 35 percent to 21 percent.
- New Jersey Out-of-Network Bill. After languishing for nearly a decade due to strong opposition from the physician community, this bill was signed into law on June 1, 2018. It imposes notification and disclosure requirements for out-of-network providers. These providers need to provide cost-of-care estimates to patients as well as detail the patient’s financial responsibility. Additional disclosure requirements are required by physicians who utilize other physician services for their patients’ care, such as anesthesia, lab work, pathology and radiology. The bill also includes a state-regulated binding arbitration process for the settlement of an out-of-network bill for disputes in excess of $1,000.
- New Jersey Telemedicine Law. Enacted in 2017, this law states that healthcare services may be provided to clients “using electronic communications, information technology or other electronic or technological means to bridge the gap between a healthcare provider who is located at a distant site and a patient who is located at an originating site.” Draft regulations, which were approved in June 2018, further define the practice of telemedicine in the state of New Jersey.
- Individual Health Insurance Mandate. In response to Congress’ repeal of the federal mandate established under the Affordable Care Act, effective Jan. 1, 2019, all New Jersey residents are required to have health coverage or pay a penalty. The state expects to collect between $90 and $100 million in penalties which will fund a reinsurance program.
Challenges for healthcare professionals will continue into next year with MACRA compliance and penalties increasing. Private payors will continue the move toward risk-sharing models. With more employers moving to self-funded insurance plans, practices will need to develop new skill sets to navigate through this growing reimbursement model. Private equity will continue as a disruptor in healthcare.
Rest assured, change is here to stay, but with change comes new opportunities. It is important to adapt and evolve with the fast-changing times instead of playing catch-up.
Susan E. Reed
Susan E. Reed, CPA, CFP ®, is a partner with Sax and is head of the firm’s healthcare practice. She is a member of the NJCPA.
This article appeared in the November/December 2018 issue of New Jersey CPA magazine. Read the full issue.