1) Use your critical thinking skills to write a paper of 1,000–1,200 words that responds to the question, “Is the PPACA legislation an improvement or a liability to our health care delivery system?” Use examples to illustrate your points and include pros and cons of the changes.

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2) Refer to the assigned readings to incorporate specific examples and details into your paper.

3) Prepare this assignment according to the APA guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

4) This assignment uses a grading rubric. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.

You are required to submit this assignment to Turnitin. Please refer to the directions in the Student Success Center.


Health Care Reform and Future Possibilities


Health care has undergone episodes of major change since the introduction of Medicare in the 1960s. All of these have resulted in fundamental changes in how health care providers were paid for services to Medicare patients and were swiftly followed by matching changes from independent insurance companies. The latest, and some might say the biggest, change since diagnosis-related groups (DRGs) were introduced in 1983 is the signing into law of the Patient Protection and Affordable Care Act (PPACA), on March 23, 2010. This law proposes to change the delivery of health care services by changing how providers are paid and what they are paid for. This module explores some of the key elements of PPACA and how health care providers are planning their changes in delivery processes and systems in response.

Major Elements of PPACA

The most significant elements of the PPACA legislation are scheduled to take place over several years. Congress still has the ability to modify some of these elements, so we will examine them with that in mind.

June 2010

Adults with pre-existing conditions were eligible to join a temporary high-risk insurance pool run by the federal government. This will be replaced by a health care exchange in 2014, which will provide access to insurance at affordable rates. Applicants must have a pre-existing health care condition and have been uninsured in the six months prior to application. Premiums will be set at rates for the general population rather than the high-risk premiums charged by insurance companies. Out-of-pocket costs will be limited to $5,950 for individuals and $11,900 for families.

July 2010

The government established the National Prevention, Health Promotion, and Public Health Council, with the Surgeon General to act as chair of the council. This council will oversee the implementation of many of the PPACA elements and will disseminate recommendations to the health care community at large in regard to best practices in prevention and health promotion. As of fall 2010, little had yet been heard from this entity. However, the National Committee on Quality Assurance, which is a private entity dedicated to improving the quality of health care services, is providing best practices and quality measures for health care providers, especially hospitals.

September 2010

Insurance companies can no longer apply lifetime dollar limits on essential benefits for patients. In addition, children may be covered under their parents’ insurance plan until they turn 26 years of age. This includes children not living at home, not listed as dependents on their parents’ tax returns, not students, and children who are married. Further, no patients under 19 years of age with pre-existing conditions can be excluded from health care benefits based on the pre-existing conditions, and there can be no deductibles or copayments required for provision of preventive care measures and medical screening activities for new health insurance plans. However, these may still apply to existing or grandfathered plans. There was a one-time payment of $250 to seniors on Medicare Part D to cover part of the pharmacologic payment gap in 2010. Insurance companies can no longer drop people from coverage if they become ill, and Medicare patients with chronic illnesses are to be monitored and evaluated every three months for coverage of medications prescribed to treat those illnesses.

January 2011

Insurance companies were be required to spend 85% of the premiums taken in for large groups and 80% of premiums for small groups and individuals on health care services or improvement of quality, not administrative services.

January 2012

Employers must disclose the value of the benefits they provide for each employee’s health coverage on Form W-2.

January 2013

People who are self-employed and individuals making more than $200,000 per year are subject to an additional tax of 0.5% to assist in reducing the overall costs of health care reform.

January 2014

Insurers cannot discriminate or charge higher rates for patients based on pre-existing conditions, and Medicaid eligibility will be expanded to include people with incomes up to 133% of the federal poverty level. There will be two years of tax credits provided to small businesses that provide health insurance to employees, in order to partially offset those costs. Financial penalties will be applied to employers with more than 750 employees if they do not provide health insurance as a benefit. Annual deductible costs will be capped at $2,000 for individuals and $4,000 for other plans, while individuals who do not obtain health insurance will be required to pay an annual penalty of $95 or 1% of their income. Health insurance exchanges will be set up to enable individuals to shop for insurance.

There are other components in the legislation, but these are the key ones. The implications for the legislation have several points for consideration:

·What is the cost to operate this new system? Medicare is still proposing a fee-for-service payment methodology, with a shared savings bonus for health care providers who meet certain requirements. Will this be successful in reducing overall health care costs in the system? Medicare is already exploring other payment options, including the possibility of capitated payments in some areas. The current model will continue to provide payments for procedures and activities rather than the total shift to care management that capitation would require.

·With more people obtaining insurance, what will happen to demand for access to care? In Massachusetts, a model similar to the federal model of PPACA has been in place for several years. Massachusetts experienced a significant increase in demand for care, resulting in longer waiting times to get appointments with physicians and increased demand for hospital services. With primary care physicians graduating in lower numbers, the access to these physicians may become more difficult as more people obtain insurance and increase their demand for services.

·As components of the system switch to payments for keeping people healthy, the demand for procedures may lessen. However, healthy lifestyles require significant changes in behavior, as anyone who has tried to lose weight or stop smoking can attest, and it is still questionable whether the population as a whole is ready to make those changes.

·A highly controversial part of the PPACA legislation is the requirement to have insurance or pay a penalty. Younger, healthy adults have made the argument that they do not see a need to have health insurance or to pay for it. However, insurance companies need a large number of the people they insure to have a basis of good health in order to offset the higher costs to provide care for less healthy individuals. The requirement to force all citizens to obtain health insurance is very contentious and may not survive in legislation to 2014. However, failure to enforce this will result in continued higher costs for hospitals, which are mandated to provide care regardless of ability to pay.

Responses of Health Care Providers

What are the health care providers in the system doing to respond to and prepare for the changes the new legislation is imposing?

·New models of care are emerging. The concept of the Accountable Care Organization (ACO) is being tested at various sites across the country. ACOs are systems of health care delivery that include participants across the continuum of care, including primary care physicians, hospitals, specialists, post-acute care facilities, home health, and disease management clinics, among others. These providers are linked into a system of care that is tied together by an electronic health record, standardized protocols of care, a focus on management of care, case/disease management standards, reduced costs, and measurement and monitoring of quality outcomes and indicators. The formation of these ACOs is a huge undertaking, requiring major changes in current operations and systems between existing entities. Hospitals and physicians will be required to align in their approaches to care, their management of system costs, and their share of revenue. ACOs are likely to see global or bundled payments from payors for an episode of care. In this payment method, a total payment for all services is made to the ACO for a patient’s episode of care (which can be defined in several ways), and the ACO will determine which provider gets what amount of the total payment for the services they rendered. The complexity of this can be appreciated when one understands that this requires the hospital, post-acute care facility, and all physicians to agree on the distribution of payment.

·Another new model of care that may operate under the ACO or as a stand-alone is the medical home concept. In this, patients select a primary care physician who assesses their health needs, coordinates the care needed by the patient among a range of providers, and monitors their outcomes and the quality of the care. The role of the primary care physician takes on a greater importance than in the existing system. This is different than a gatekeeper model, where the permission of the primary care provider was required before patients could access other services. The role in this model is more collaborative and coordinative, ensuring that patients get the care they need in order to achieve the outcomes desired and to maintain health.

·Physicians are moving toward being employed by hospitals and health systems. Many physicians are looking at the reductions in reimbursement being imposed by Medicare on Part B payments and the impacts on their ability to maintain their income. The outcome of this is, in many cases, compelling physicians to approach their local hospitals and explore employment rather than independent practice. The trade-off is the security of a salary and benefits without the headaches of billing and collections and the costs of operating the practice. For the hospitals, the advantage is to have access to that physician’s pool of patients when they need care. The trick is to find a way to manage employed physicians’ practices without suffering significant financial losses. An interesting concept for this that is gaining considerable traction is the rise of midlevel providers in practices, including nurse practitioners and physician assistants.

·Primary care physicians are the key to the future in an ACO. The foundation of an ACO will be the pool of patients it manages, and the key to that is a large, competent, high-quality base of primary care physicians to establish some variety of the medical home and attract large groups of patients to it. The Centers for Medicare and Medicaid Services (CMS) is already pushing this by reducing the payments going to specialists while increasing the percentages of payments going to primary care physicians. CMS is also beginning to compensate primary care physicians for managing care outside the hospital and promoting health assessments and preventive activities, such as cholesterol screens, diabetes monitoring through hemoglobin A1C testing, and regular blood pressure monitoring, among others. ACOs are experimenting with chronic disease management clinics and protocols as a method of keeping patients healthier and out of the hospital. These may be based in primary care practices.

·The role of the hospital will change in this model. Hospitals have traditionally been a revenue generator for a health care system in the world of payment for procedures. High occupancy rates by patients needing surgery or other procedures have long been an effective strategy for making money. In the new system, however, as the payment methodologies begin to shift to payment for prevention and maintaining health and to capitated methods, the hospital will become a cost center and a location of last resource. Efforts will be made to do more procedures on an outpatient basis, such as minimally invasive surgeries and outpatient imaging studies, rather than do them during a hospital admission. Hospitals will be pushed to reduce costs of care, by standardizing care protocols with groups of physicians, negotiating supply cost reductions on a large scale, and actively case managing inpatients to reduce length of stay. Elective surgeries may begin their process weeks in advance, as discharge planning and postoperative care issues are planned prior to hospitalization. The use of post-acute care facilities to provide post-procedure care may well be expanded, and patients formerly staying four days in a hospital may find themselves transferred to a lower level of care within two days. The insurance companies are beginning to refer to this reduction in hospital usage as “demand destruction,” or the attempt to destroy/reduce demand for high-acuity/high-cost services. The implications for specialists whose practices are built around hospitalized patients are obvious and frightening for those looking ahead.


The advent of change of this magnitude to the health care delivery system is both frightening and intriguing. No one with knowledge of the current system would deny that it is fundamentally broken in many ways, with costs growing exponentially and care outcomes frequently less than desired. Access to care is limited or absent for a large number of the population, and the focus on pay for procedures assures that costs will continue to climb. The question is whether the new legislation will actually reduce costs in meaningful ways while maintaining or improving quality of outcomes and higher maintenance of people’s health. One thing is for certain: the changes over the next decade will be challenging, and the final outcome is yet to be determined.


Electronic Resource

1. About the Affordable Care Act

Read “About the Affordable Care Act” located on the U.S. Department of Health and Human Services website.


2. Affordable Care Act

Read “Affordable Care Act” located on the Centers for Medicare and Medicaid Services website.


3. Affordable Care Act – Working with States to Protect Consumers

Read “Affordable Care Act: Working with States to Protect Consumers” located on The Centers for Medicare and Medicaid Services website.

https://www.cms.gov/CCIIO/Resources/Files/working_with_states_to_protect_consumers_06222011.htmle-Library Resource

1. Health Care Reform and the American Congress

Read “Health Care Reform and the American Congress,” by Durenberger, from Milbank Quarterly (2015).


2. Obamacare vs. AHCA and BCRA

Read “Obamacare vs. AHCA and BCRA,” byLee, from Modern Healthcare (2017).


3. Opportunities and Accountable Care Organizations

Read “Opportunities and Accountable Care Organizations,” by Babyar, from Journal of Medical Systems (2016).


4. Three Words and the Future of the Affordable Care Act

Read “Three Words and the Future of the Affordable Care Act,” by Bagley, from Journal of Health Politics, Policy and Law (2015).