How Will Healthcare Reform's Coverage Requirements Affect ASCs?
Important dates to know
• Jan. 1, 2014: individual mandate. Open enrollment in the PPACA health insurance exchanges ran from Oct. 1, 2013 to March 31, 2014. The Obama administration announced the exchanges surpassed the goal of 7 million enrollees by the end of the open enrollment period.
• Jan. 1, 2015: large employers mandate. The original date of this mandate, for employers with 100 or more employees, was Jan. 1, 2014. On July 2, 2013, this mandate was delayed.
• Jan. 1, 2016: medium employer mandate. The original date of this mandate, for employers with 50 or more employees, was Jan. 1, 2014. On Feb. 10, 2014, the mandate for employers with 50 to 99 patients was delayed by two years.
Small, medium or large?
The number of employees must be determined to understand how the benefits mandates will affect an ASC, which can seem deceptively simple.
"The Affordable Care Act has multiple formulas used to determine number of employees, each of which correlates with different purpose called out by the Act," said Mr. Jacobs. "The two most basic methods used for the purposes of the Act are 1) a simple head count; and 2) adding total number of full-time employees with full-time equivalents."
A simple head count is used to determine whether your facility can access the small group or the large group health insurance market for your employee benefits. On the other hand, you would add up the full time employees combined with the full time equivalent to determine whether your facility would be subject to the employer mandate on and after the dates listed above. In this case, Full-time employees work an average of 120 hours per month, while “full time equivalents” are determined by adding up all of the hours worked by non-full time employees and dividing by 120. With flex hours and fluctuation in number of part-time employees, ASC leaders must consistently track these numbers.
ASCs are often owned by multiple parties, which can bring the "control group" rule into play. For example, if a hospital, physician practice or ASC company owns 80 percent or more of an ASC, the number of ASC employees is combined with number of the controlling entity's employees. In many cases, this will push an ASC past the 50-employee threshold and make it subject to the health coverage mandate.
This does not mean ASC employees must be covered by the majority stakeholder. Instead, the ASC will have the choice to offer separate coverage to its employees. "If your ASC is an eligible medium or large employer, it must provide coverage for any full-time employee that works at least 30 hours per week on average by the required dates," Mr. Merski said.
If an ASC is close to the 50-employee mark at the end of the year, its leaders must decide if the business qualifies as small or large. "Changing staff hours to go under those levels artificially is a big 'no' and will be treated as such by the government," says Mr. Jacobs.
Some employers may inadvertently, or consciously, miss the deadlines for providing employees coverage. At this point, these businesses become subject to penalties.
For large employers that decide not to offer coverage, they are offered leniency on the first 30 employees. After that, they will have to pay fines of $2,000 times the total number of FTEs. In a second scenario, a large employer offers basic coverage that does not meet the requirements set forth in the PPACA because, for example, it is unaffordable for employees. The penalty would be $3,000 for each full-time employee receiving a premium tax credit for health coverage on the exchanges or $2,000 times the total number of FTEs, whichever number is lower.
ASCs with less than 50 employees
ASCs with less than 50 employees are not required by the PPACA to provide health coverage for employees, but offering coverage does still have a certain appeal for employee retention and recruitment. "ASCs are competing with hospitals and other healthcare employers for employees," said Mr. Jacobs. "Most ASCs do offer a health benefit plan, which takes care of an employee's individual mandate."
The PPACA mandated that states open Small Business Health Options Program exchanges, designed to help small employers provide affordable coverage for employees. However, on Nov. 27, 2013, SHOP exchanges were delayed. Some states have these exchanges up and running, but several do not. If and when SHOPs are fully up and running, they may be a good option for small businesses, said Mr. Jacobs.
The reform mandates are sparking interest in alternatives, such as employer-sponsored self-funded health plans or private exchanges. Seventy-one percent of employers are considering alternatives, such as a self-funded plan, and 50 percent are considering, or have already turned to, private exchanges, said Mr. Merski.
"In the past, ASCs turning to self-funded insurances was unheard of, but now more and more organizations are willing to work with smaller groups," said Mr. Jacobs. Whether a self-funded insurance is a good option for ASCs depends on the organizations' willingness to shoulder risk.
Developments to watch
The PPACA has caused a feeling of widespread uncertainty. Consumers are concerned about rising premium costs. "Economists have no consensus on how the PPACA will work in the long-term," says Mr. Jacobs.
Health insurance premiums for many individuals and families are on the rise. There is concern over whether enough young individuals will sign up for coverage through the exchanges, said Mr. Merski. There has also been discussion of adding a "copper" plan to the exchanges to allow for more diversity in coverage. The question remains of how much modification the PPACA will undergo in the coming years.
One of the largest questions that looms in the industry is whether physicians and ASCs will begin to drop out of managed care networks, transitioning instead to a concierge-style of care. "That is a huge question," said Mr. Jacobs. "One that could dramatically change the future."
"In the coming months, we will have to face next year's plan design, next year's enrollment and next year's cost. We have no idea where this is going, but we must be vigilant and aware of what is happening around us," said Mr. Merski.
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