Innovation and Collaboration: Keys to Success When It Comes to PPACA
Source: Managed Care Outlook – February 15, 2011, Volume 24, Number 4
By: Reba Kieke, Managed Care Outlook
Click here to download PDF
The term “far reaching” has been used more than a few times to describe the Patient Protection and Affordable Care Act (PPACA), also known as health care reform. PPACA takes aim at some of the hardest topics in health care, including preexisting conditions, questionable insurance practices, barriers to care, fines and penalties for lack of coverage, accountable care organizations — and everything in between.
PPACA is huge — not only in content but also in terms of implications. While it would be impossible to cover the Act in its entirety in a few short pages, with the help of Ron Wince, chief executive officer at Guidon Performance Solutions, this article highlights some of the ways PPACA will impact health plans, not only in the short-term but also in the months and years to come. It also discusses what plans (and providers) can do to successfully “find their way,” so to speak.
“State health exchanges will be problematic as health plans and associated organizations try to meet the federal requirements and individual state requirements in regions they serve (or want to serve) and also create plans that can be competitive,” explains Wince. “The question is if the volume that can be captured offsets the cost and complexity that goes along with this. Medical loss ratio requirements will present challenges; the question is how the definition of MLR will come out in the regulations. Also, various limits on fees, compensation, et cetera will require plans to fundamentally rethink many parts of the way they do business beyond just providing coverage.”
Undoubtedly, PPACA will impact reimbursement, acknowledges Wince, but how exactly remains to be seen. “My best professional answer is that it depends. My personal opinion is, if the two parties approach it in the right way, it can improve the relationship. Those who go this route will do the best under Obamacare. It is possible it can become more adversarial as cost-shifting escalates. This is the dark side.”
Either way, the general sense is that change is on the way, says Wince. “I believe it is yet to be determined, but in broad terms, most of our clients are bracing for improved reimbursement for the uninsured care they provide; however, this will be more than offset by a more complex claims process, higher compliance and reporting efforts, and pressure on reimbursement rates from Medicare and Medicaid. This likely will drive providers to rethink relationships with other players in the value chain.”
This isn’t necessarily good news, notes Wince. “I have yet to see a situation where greater regulation and complexity are an improvement. The more complex the landscape, the more it costs to meet the requirements and the more likely you are to fail. While I think the good news could be a more coordinated approach to care, the journey to reach that point will be painful and expensive.”
The impact on the health care industry as a whole is pretty straightforward, says Wince. Those who adapt by figuring out how to become more collaborative and innovative in the way they work with their value chain partners will be the winners.
“Overall, I think the cost and complexity will be a net negative for the industry and most participants. The inter-relationships in this system are too complex to assume there will not be a myriad of action-reactions, which at a system level will be a negative,” explains Wince. “If you take a look at the reaction already underway in financial services from financial reform, where banks are finding new revenue streams to replace those that have been lost, you will see similar shifting of costs and changes in the relationships as plans, providers, and other partners find ways to offset the costs that will come from heavy-handed regulations.”
Health plans will need to adjust to this changing landscape by beginning early to define new business models, new operating partnerships, and shore up their relationships in the adjacencies that directly impact them, stresses Wince. “Avoid the approach we saw under Y2K and Sarbanes-Oxley by looking at the new regulations as to how they impact the processes of the business. Redesign the processes from the ground up to meet the requirements of the new legislation while decreasing the effort and cost that goes along with compliance,” he continues. “Technology will be front and center for some time — but it is not a silver bullet to automate ineffective or costly ways of doing business. Take a more systemic view of technology and how it can play a vital role in reducing touch-points, drive adherence, and provide insight into where the highest risks are.”
Providers and payers will need to find ways to work together to develop stronger collaborations versus adversarial relationships, adds Wince. “The biggest opportunities for improvement in any system are where one organization ends and the other begins. By focusing efforts on making those bonds work better, both providers and payers can successfully navigate the landscape of PPACA.”
Ron Wince has overseen the start-up and growth of Guidon Performance Solutions to a full-service business process excellence and technology consulting firm. Prior to founding Guidon, he held senior leadership positions at J.P. Morgan Chase, Freudenberg-NOK, and Lear Corporation.
All contents © 2011 Managed Care Outlook. All Rights Reserved.
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