The ACA’s Impact on Anesthesia Practices: What We’ve Learned

SUMMARY
A review of data in selected markets indicates that, while the impact of the ACA varies significantly in different parts of the country, anesthesia practices have, on the whole, fared well with health reform. Despite the slow but steady increase in Medicare patients, the net yield per unit continued to rise for most ABC clients from 2012 to 2016, regardless of state or practice type. The impact of the ACA on anesthesia practices will be explored in more depth in a future issue of ABC's quarterly newsletter, Communiqué. ABC clients are encouraged to contact their account managers for a more detailed analysis.

In March 2010, Congress passed and President Obama signed the Patient Protection and Affordable Care Act (ACA). It would take a number of years for the various provisions of what we now refer to as Obamacare to be implemented. By 2014, these would include significant protections for patients trying to obtain and maintain health insurance, such as the elimination of pre-existing medical condition limitations, guarantees of key insurance provisions, such as obstetric care, and new ways to obtain health insurance.

In addition, the ACA requires private health insurers to cover recommended preventive services without any patient cost-sharing, such as copays and deductibles. Recommended services include screening for diabetes, obesity, cholesterol and various cancers, including colorectal cancer, as well as counseling for drug and tobacco use and healthy eating, among others. How coverage for these preventive services has impacted anesthesia providers will be explored in more depth, along with other aspects of the ACA, in a future issue of ABC's quarterly newsletter, Communiqué.

A key provision of the ACA mandated that all Americans have health insurance coverage. As a result of the law, Americans can obtain insurance coverage from government payers, Medicare and Medicaid, employer insurance plans, exchange plans and other options. Though considerable discussion of the ACA's shortcomings and options to replace it before and since President Donald J. Trump's election have yet to result in an alternative, the question continues to be asked: How has Obamacare impacted physicians in general and anesthesia practices in particular?

The ACA's primary intent was to make healthcare insurance accessible and affordable for more Americans. Has the law reduced the percentage of self-pay or uninsured patients? In many cases, the new plan options involved higher deductibles. How has this trend impacted the typical anesthesia practice?

Arguably, the most significant part of the legislation was the expansion of Medicaid. Has this expansion made it easier to collect from previously uninsured patients? The law also created a new type of health plan called the exchange. Did the exchanges enhance or detract from practice collections? And finally, are anesthesia practices doing better or worse as a result of these changes? The best way to measure their impact is to track the effective average yield per ASA unit billed.

We now have a unique opportunity to assess the impact of these various aspects of the ACA. For purposes of our review, 2012 and 2013 can be considered the baseline period. 2014 is the year of implementation, and 2015 and 2016 provide the best examples of how the implementation of various provisions has impacted ABC clients. Although the ACA's impact on anesthesia practices varies widely, a review of the data reveals that 2015 and 2016 were a generally positive period for most anesthesia practices. For all its problems and issues, the ACA generally enhanced revenue and profitability.

Percentage of Patients With No Insurance

Patients with no insurance are generally referred to as self-pay patients, although in some practices this term may refer to patients who have prepayment arrangements for cosmetic surgery. Many practices are located in favorable settings where the percentage of patients with no insurance has always been low. These practices did not see much of an impact on the self-pay population with Obamacare. Other practices, however—especially those in New Jersey—saw a significant decrease in the percentage of self-pay patients as they migrated into Medicaid plans.

Average Patient Deductibles

Patient deductibles have been increasing for years. As a result, while many of the exchange plans implemented under the ACA have high deductibles, it is not clear to what extent the rise in average patient deductibles can be attributed directly to the ACA. Deductibles have continued to increase during this period for many practices. However, they have not risen as high as many expected, in part because the insurance plans and products associated with the ACA represent a relatively small percentage of the patient population.

Medicaid Expansion

Each state had the option to expand its Medicaid program to provide coverage to patients and families with incomes up to 138 percent of the federal poverty level. Many states opted not to participate, but 21 states accepted federal dollars to help defray the additional cost. New Jersey is a good example of a state that took advantage of Medicaid expansion. Practices in the state saw a reduction in self-pay patients and an overall increase in revenue. Although Medicaid rates are very low, the net yield for anesthesia practices has been better than no payment.

State Exchange Plans

While the ACA created a national healthcare exchange, states also had the option of creating their own online marketplaces (see map below). The best examples of these online marketplaces can be found in California, where Blue Cross created the Blue Cross Exchange Plan and Blue Shield, a separate payer in the state, created the Blue Shield Exchange Plan. Each exchange plan offered a number of options that allowed patients to pick their premiums and deductibles. While the rates paid for these exchange options tended to be slightly lower than commercial rates, the exchange option's overall impact was positive.

Overall Financial Impact

The ACA is a complex piece of legislation that impacted virtually every aspect of American healthcare and medicine. While some aspects of the law, such as the Medicaid expansion, may have impacted some practices positively, and while some exchange plans may have impacted others negatively, the overall impact appears to be relatively minor.

Most ABC clients have seen consistent growth in volume and yield per ASA unit billed during this period.

Three factors determine an anesthesia practice's value: case volume, acuity of care, as measured in units per case, and net yield per ASA unit billed. Surgical and obstetric case volumes may rise or fall based on a number of local factors and are not impacted specifically by the ACA. Similarly, the average units per case will reflect the percentage of outpatient versus inpatient cases. Growth in endoscopic anesthesia will cause the average units per case to drop. The one metric influenced by healthcare policy is the yield per unit billed. Despite the slow increase in Medicare populations, the net yield per unit continued to rise for most ABC clients from 2012 to 2016, irrespective of state or type of practice.

ABC Clients: The ACA's impact has varied significantly by state. If you are interested in knowing more about how your state fared under health reform, your account manager will gladly prepare an analysis for you.

With best wishes,

Tony Mira
President and CEO