September Layoffs Largely Concentrated in Healthcare

The once recession-proof healthcare industry took a large hit in September, reporting more layoffs than any other industry for the month.

Hospital layoffs

Healthcare providers let go more than 8,000 employees, including administrative staff as well as doctors and nurses, in an ongoing effort to reduce costs. Some notable reductions are Vanderbilt University Medical Center’s 1,000-employee cut and Cleveland Clinic’s 3,000-employee buyout plan. Reductions are projected to continue into next year, cutting into the past year’s gains in private hospital employment.

The layoffs are a response to a variety of funding cuts and changing hospital conditions, including new reductions established by the Affordable Care Act. Medicare and Medicaid reimbursements in particular have fallen sharply due to sequestration and additional penalties associated with the Hospital Readmissions Reduction Program, which cuts reimbursement to hospitals with excessive readmissions for applicable conditions. Other factors include:

  • Research funding from the National Institutes of Health was cut five percent due to sequestration;
  • Increasing numbers of patients are aging into Medicare, which reimburses at lower rates than private insurance;
  • Despite the ACA’s expansion of Medicaid, 26 states have chosen not to expand the program and accept greater funding (Vanderbilt cites this as a primary cause of their cuts);
  • Private insurance policies are paying out lower amounts, passing costs on to patients with higher deductibles and co-insurance;
  • Inpatient stays have shortened since the recession began, decreasing in length by four percent from 2007-2011.

Healthcare consultants, however, point out that hospital layoffs are a shortsighted solution that many facilities will have to reverse as more patients take advantage of their access to affordable healthcare and seek treatment they may have otherwise eschewed.

There are alternative solutions for facilities looking to shore up their cash flow. Medical receivables factoring gives hospitals immediate access to cash that they can use to meet their expenses without cutting employees they will likely need to call back in the next few months. PRN Funding has more than a decade of experience in the healthcare industry and can help meet the unique needs of providers. Apply today to learn more and get the cash ball rolling.

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Up-Front Deductible Payments on the Rise

Need to see the doctor? Be prepared to pay at the door.

Up-front deductible payments

The Affordable Care Act has prompted a shift toward low-premium, higher-deductible health plans, both employer-provided and available on the exchange. In order to collect as much of the out-of-payment cost as possible, many health providers have responded by requiring up-front payment from patients before receiving nonemergency treatment. Insured patients at these facilities must pay their co-pay, co-insurance, and deductible up front, and uninsured patients are responsible for the full (estimated) cost of treatment.

Administrators at facilities currently using this practice argue that it is the most effective way to receive payment, particularly when so much of the burden is shifting to the patient. A great deal of costs for medical treatment become bad debt – in 2011 alone, hospitals provided $41 billion in care that was never paid for. Hospitals attribute this to patients’ reluctance to make their health spending a priority, and to a lack of awareness of financial assistance programs that can eliminate the strain of a single large payment.

The up-front model is an extension of one already in practice in most doctors’ offices around the country, where co-pays and co-insurance are collected at the check-in for an appointment. By implementing the practice in hospitals, administrators state that they can connect patients to financial assistance sooner and increase the likelihood of full payment.

Opponents of the idea, however, point out that up-front payments may create a barrier to receiving health care. As deductibles continue to rise, patients will be increasingly unable to cover the cost of their care and may elect not to seek treatment – in effect, creating a situation directly opposite the intended outcome of the Affordable Care Act.

PRN Funding offers healthcare factoring and medical receivables factoring services to vendors and facilities struggling to bridge the cash flow gap. Before shifting to the up-front model, contact us to see how we can help you meet your cash flow needs and continue to provide quality care to your patients.

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Hospitals Shed Light on the ACA Blame Game

Following Cleveland Clinic’s announcement last month of more than $300 million in budget cuts, we addressed the ongoing blame game over the Affordable Care Act in the mainstream media. Members of the mainstream media have been slow to take up the question, but this week the Plain Dealer asked the question: Is Obamacare really to blame for cuts at the Cleveland Clinic and other hospitals?

Frustrated business person overloaded with work.

The Cleveland Clinic has previously attributed their budget decision to “a number of factors”, as have other hospital systems considering or implementing similar cuts. Now, hospitals spokespersons and health care analysts have provided a more in-depth explanation of exactly how the Affordable Care Act will affect hospital systems going forward.

Medicare

Hospitals already handle a large annual gap between the health care they provide to Medicare recipients and the reimbursement limits that the Centers for Medicare and Medicaid Services place on various services. The ACA includes an additional Medicare spending reduction of $716 billion over the next ten years. Some of the cuts are specifically directed at hospitals, such as the Hospital Readmissions Reduction Program.

Another portion of the pending cuts to hospitals is $22 billion over ten years from the Disproportionate Share Payments (DSH), which cover charity care in hospitals with large numbers of uninsured patients. Hospitals expect to compensate for this particular cut with insurance payments from previously uninsured patients who will have access to coverage through the federal health exchange. These cuts come in addition to other reductions approved by Congress since the ACA passed in 2010.

Medicaid

The ACA expanded Medicaid coverage to include patients earning up to 138 percent of the federal poverty level, in an attempt to provide an affordable health care option to parts of the population too poor to pay a monthly premium even with tax subsidies to help. To ease state concerns about the costs of expansion, the federal government will pay all new Medicaid costs through 2016, when they will scale back their coverage to 90 percent.

However, when the Supreme Court upheld the ACA’s individual mandate they failed to uphold the obligation of the states to expand their individual Medicaid programs. In states such as Ohio and North Carolina where the government has chosen not to expand, hospitals will not be able to recoup the loss of Medicaid DSH funds cut through the ACA. With fewer newly eligible Medicaid patients than projected, hospitals are forced to contain their costs through other means.

Bad debt

Hospitals must already contend with bad debt from patients who do not cover the portion of their invoices beyond coverage limits, as well as costs they swallow from providing charity care. The Medicare and Medicaid restrictions described above will contribute to this ongoing problem but interestingly enough, so will the health plans available to patients in the online marketplaces.

The affordability of health care is a complex matter that goes beyond the cost of the monthly premium. Insurers balance low premiums such as those available in Bronze or Silver plans with higher deductibles and out-of-pocket costs, meaning that a patient who seeks care at the hospital will end up with a higher portion of the bill once that care is provided. As much as a third of uncollectible hospital bills are estimated to belong to patients with health care.

Still, hospitals are optimistic that higher numbers of insured patients will create a net gain, as they will be able to reduce their bad debt expenses for uninsured patients and will instead receive payment for at least part of services provided directly from the insurer.

The Cleveland Clinic is one large example of how the Affordable Care Act may affect hospital operations, yet they also offer an important caveat against framing the discussion of other facilities’ budget decisions solely within the context of the ACA.

If you provide services to a hospital or medical facility, healthcare factoring can help you maintain a positive cash flow without falling victim to uncertain hospital payment terms. PRN Funding offers a variety of healthcare factoring programs designed to meet the unique needs of healthcare vendors. The application process is fast and easy – contact us to start today.

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ACA: Updates, Delays, and Deadlines You Should Know

A number of delays have plagued the implementation of the Affordable Care Act, and new deadlines have been established. Following is a brief rundown of delays and deadlines to keep your understanding of the ACA up to date.

Deadlines

Reporting employee status: Employers must begin to collect information about their employees’ status over a 12-month period of their choosing in order to estimate their tax liability when the employer mandate takes effect next year (see Delays, below). Beginning in 2015, employers subject to the mandate will be required to offer coverage to employees who work full-time or pay the corresponding penalty.

Marketplace notification: Employers subject to the FLSA should have notified their employees of available health care options on the health insurance exchanges by October 1, the enrollment start date. If you haven’t yet notified your employees, do so ASAP.

Summary of Benefits: Employees must receive a summary of their provided benefits no later than 30 days before the beginning of the plan year. The summary must indicate whether coverage meets the minimum essential standard established by the ACA.

Delays

Small Business Health Options Program (SHOP) marketplaces: Originally slated to roll out with the individual marketplaces on October 1, the federal government delayed the launch of the SHOP marketplaces to November 1. Plans purchased on the exchange will still begin January 1, and small businesses that purchase their plans through brokers or other means will not be affected.

In addition, the marketplaces will have an additional year to offer a la carte plan options, in which businesses may choose individual coverage for their employees within an overall package.

Employer Mandate: Companies employing more than 50 full-time employees now have until 2015 to provide minimum essential coverage before they are subject to the $2,000-$3,000 per employee tax penalty for noncompliance.

Out-of-Pocket Limits: Some insurance plans will not be subject to consumer out-of-pocket limits ($6,350 for an individual/$12,700 for a family) until 2015. During the delay period, employers who offer separate plans for care and pharmacy benefits will be allowed to maintain separate limits for each plan, and plans that do not have a limit will not be required to implement one.

Update on the Individual Marketplaces

Technological issues that crippled several state exchanges soon after their launch have been resolved, leading to tens of thousands of new enrollments during the first week of operations nationwide. In the meantime, federal officials have acknowledged the need for design and server updates to the federal exchange at healthcare.gov to handle the high levels of traffic and make the experience more user-friendly.

PRN Funding’s healthcare factoring programs can provide the cash flow for your company to effectively fulfill its healthcare responsibilities under the ACA. Contact us to learn more.

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Affordable Care Act Could Lower Insurance Costs for Some Small Businesses

Numerous small business employers and owners are worried about their insurance costs rising under the health law next year. However, for some businesses, especially those with older workers or those who have employees who have been ill, costs may actually decrease according to business owners and insurance brokers.

Under a stipulation of the Affordable Care Act (ACA), which goes into effect in January, insurers will be forbidden from setting rates for healthcare coverage based on the health status of employers or their employees are at businesses with less than 50 or 100 workers, depending on the state. Rather, the rates will be announced on government-run health insurance marketplaces, or online exchanges, which are meant to extend the additional costs of insuring higher-risk policyholders, like those with prior sicknesses or pre-existing medical conditions.

A survey conducted in April by The Wall Street Journal and San Diego-based executive mentoring group Vistage International Inc., found that 12% of 783 businesses with less than $20 in yearly revenue believe their insurance premiums will be cheaper or stay roughly the same under the ACA. Similarly, a survey by eHealthInc. done in February found that 11%of 259 small business employers, most with less than 10 workers employed at their businesses, said they think their rates will go down next year.

Some business owners say costs could go down if the exchanges produce cheaper rates on individual plans, which would lead some employees to drop their employer-sponsored plans completely.

Both early renewals and self-funded plans will end up keeping more groups off the exchanges, which will reduce the savings for high-risk policyholders. Besides that, any savings from the exchanges will be contingent on whether they’re up and running by Oct. 1, the deadline for offering coverage that will be effective come January.

The federal government’s own health-insurance exchange for small businesses, called the Small Business Health Options Program, or SHOP, which it will supervise in 33 states, isn’t expected to be fully operational and available until 2015.

Congress Considers Revisions to ACA to Help Small Businesses

Attempts to repeal a tax on insurance companies in the new healthcare reform law are picking up steam in Congress, driven by worries that the fee would affect small businesses especially hard.

The legislation would get rid of the fee on health insurance companies set to go into effect when the law does in January 2014. Referred to as the health insurance tax (HIT tax), the fee will be calculated based on the plans insurers sell right to individuals and companies, known as the fully insured market, but doesn’t include plans established and managed by companies themselves, known as the self-insured market.

The majority of big companies self-insure their workers; as a result, experts forewarn that insurance companies will pass the added costs of collecting the fee to small businesses, which are inclined to buy coverage in the fully insured market.

“It’s pretty straightforward, what’s going to happen, that the tax is going to be passed along,” Rep. Jim Matheson (D-Utah) said in an interview, observing that insurance agents and underwriters have told him as much. “It isn’t really taxing the insurance companies, it’s taxing the people paying the premiums, and in this case, that’s small business owners.”

Matheson is one of several democrats who have pledged their support to the legislation repealing the HIT tax, uniting with almost every Republican in the House. Recently, the bill, H.R. 763, hit the 218-cosponsor mark, which is enough to guarantee its passage in the lower chamber; the tally has since increased to 221.

Sam Graves (R-Mo.) attributed the bill’s momentum to trepidations expressed by small business owners, including many who have testified during hearings before the House Small Business Committee, over which he officiates.

“We keep hearing that from small businesses; that they’re premiums keep going up, keep going up, and now this thing’s coming along, and they’re going to go up even more,” said Graves. “That’s the reason you’re hearing so much about this tax and why you’re seeing such bipartisan efforts to repeal it.”

Those efforts, however, are fighting against the political current on the Hill, where lawmakers have been reluctant to consider proposals to modify the health care law.

This hasn’t discouraged small business advocates from pursuing small fixes, and their efforts are starting to yield signs of progress. Recently, Sens. Susan Collins (R-Maine) and Joe Donnelly (D-Ind.) introduced legislation that would change the health care law’s definition of full-time employee from 30-hour workers to 40-hour workers, a shift meant to keep labor laws more steady for businesses.

Prepare for Affordable Care Act: Tips for Employers

With the Affordable Care Act (ACA) set to go into effect in January 2014, many employers supporting group health care plans are rushing to get ready for the impending changes. Here are some tips on how to prepare for the upcoming implementation of the ACA:

1. Figure out how the ACA will affect your business. According to Forbes, when the ACA is ratified, it will oblige businesses with over 50 full time workers to offer affordable healthcare to them. The ACA is demanding employer coverage just for those who work over 30 hours per week for a period of a month. Corporations who wish to avoid providing this medical insurance for their workers and who are on the verge of having 50 employees may then look to temps and staffing agencies in order to evade being forced to obey the law or create more part-time jobs as another way to shirk the ACA’s policies. Companies doing this will undermine the legislation and its intentions of increasing coverage to more American employees.

2. Choose whether to “pay” or “play” and make decisions about your insurance. To “pay” is to pay employer-shared-responsibility penalties of around $2,000 per employee per year. To “play” is to offer employer-sponsored coverage to fulltime employees.

3. Think about adding wellness program incentives. According to a recent survey by the Midwest Business Group on Health, more than 80% of the country’s biggest employers are looking to implement a penalty and reward system to encourage their workers to get healthy.

4. Organize and give out obligatory employee communications like a summary of benefits and coverage, plan descriptions, etc.

5. Amend your Health Insurance Portability and Accountability Act privacy and security rules and processes before the Sept. 23, 2013, deadline for acquiescence with final regulations.

6. Pay the first comparative effectiveness research fees by July 31, 2013, and plan for future reinsurance charges.

Healthcare Options for Small Businesses are Limited until 2015

The Obama administration recently verified that part of the 2010 health-care law geared toward helping small businesses offer insurance to their employees will be pushed off by a year.

The department overseeing Medicaid and Medicare announced that the launch of the federal SHOP Exchange, an online marketplace where businesses with less than 50 workers would be able to buy insurance for their employees and get a tax credit, would be on track for Oct. 1. However, the initial expectation that employees would be able to choose from a variety of plans has been quelled as they will only have one option for a plan. The full selection of healthcare plan options won’t be available until 2015.

The postponement recommended earlier in the year upset some business supporters and provoked questions about whether the administration was lagging on the implementation of the healthcare law.

While large companies will be obligated to provide insurance starting next year under the law, it will be optional for those with less than 50 employees. John Arensmeyer, head of the Small Business Majority, an advocacy group that supports the health law, said the news would probably deter some companies from offering insurance to their employees.

States that already established their own health insurance exchanges won’t be impacted by the delay.

Small Businesses Unsure How Affordable Care Act Impacts Them

According to eHealth’s Fall 2012 Small Employer Benefits Survey, small businesses are confused when it comes to the impact of health care reform. In her article Health Care Reform: Myths and Realities, author Maria Valdez Haubrich lays out the facts for small business owners unsure about where they stand when it comes to providing insurance to employees.

  • Employers with 50 or fewer full-time employees are not required to buy health insurance for them.
  • Employers with 50 or fewer full-time employees don’t face any tax penalties for not providing health insurance.
  • Those with 51-199 face $2,000 for every employee that gets insurance through an exchange, except for the first 20 who do so.
  • Health insurance exchanges are to be created in every state by 2014, which will allow employees to buy subsidized insurance even with a pre-existing condition.

So what does this mean for small businesses? It means that for the smallest firms, health care reform really won’t have an impact at all on their bottom line. Medium-sized companies, however, will be subject to the mandate and might face higher costs of doing business, which could lead to them looking for sources of financing and cash flow such as factoring.

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