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US Healthcare Industry 4 Part Blog Series – Part 2: Reforms & Regulations

US Healthcare Industry Blog Series Part 2:

The last blog in this series outlined the challenges faced by the American Healthcare Industry like escalation of healthcare costs without significant improvement in outcomes, fragmented structure of incentives, lack of transparency and clarity for decision support being a few.

This blog post gives an overview of key regulatory changes in the healthcare industry which are expected to impact all the stake holders in the industry.

Patient Protection and Affordable Care Act:

Single biggest healthcare reform in last 5 decades, the Affordable Care Act intends to bring in more uninsured citizen under the fold of healthcare while reducing the overheads and wastages in the healthcare delivery to bring down the overall healthcare delivery costs.

Key Features:

Increased Access to Insurance

Extend insurance coverage to about 37 Million uninsured Americans. Positive incentives like tax credits and subsidies to employers to provide coverage to employees and negative incentives in the form of penalties to the employers who do not comply.Medicaid will be expanded to provide coverage to uninsured low income families (less that 133% of Poverty Line)

Mandates for Insurance Providers to protect Consumer Interests

The PPACA lays down several guidelines to insurance providers to protect consumer interests. These guidelines include prohibition of unwarranted premium increase, cancellation of coverage apart from the case of fraud, exclusion of children and pre-existing health conditions from coverage etc…

Focus on Prevention and Healthcare Outcomes

The PPACA establishes Prevention and Public Health Fund to encourage states to undertake public health and prevention initiatives. State will also be encouraged to provide chronic disease management services, behavioral health management and support services.

In order to redirect incentives to overall healthcare outcome of the consumers, the PPACA further incentivizes Accountable Care Organizations and similar structures which eventually reduce healthcare expenses through efficient and preventive health management of a group of beneficiaries.

Human Resource Creation

The PPACA promotes the training of healthcare workers to improve the overall healthcare delivery quality through loan programs, scholarships etc…

Transparency& Seamless Information Flow

State level health insurance exchanges will be created which will enable seamless information access regarding plans and benefits to consumers.

Health Insurance Portability and Accountability Act

Title I of the act mainly deals with portability of insurance coverage across job changes by the members.

However the Title II of HIPAA is creating a major impact on the overall structure of the healthcare industry and will require major technical and administrative process overhaul for compliance as the industry moves towards Administrative Simplification.

The act lays down guidelines for electronic health record transactions and issues related to security and privacy of the data.

The central idea of the act is to improve the overall efficiency of the system by utilizing electronic data exchange.

HIPAA 5010 is essentially version 5010 of HIPAA X12 standards which provides guidelines for electronic exchange of certain healthcare transactions. Payers, Providers and Administrators are expected to comply with HIPAA 5010 standards in order to implement the next version of health condition coding ICD 10 by Oct 2014.

ICD 10

ICD 10 is the 10th revision to the International Statistical Classification of Diseases and Related Health Problems which encodes health conditions like diseases, symptoms, injuries and diagnostics findings to provide a uniform data exchange channel. The Providers, Payers and Administrators are expected to comply with ICD 10 coding standards by Oct 1 2014.

Although ICD 10 implementation is a huge overhaul of the EHR system, effective utilization of technology can actually lead to enhancement in productivity of the Providers and Payers due to better data co-ordination across systems facilitating better analysis and decision making.

HI-TECH Act – Health Information Technology for Economic and Clinical Health Act,

Enacted in 2009, HI-TECH act aims to promote utilization electronic health records and health information technology. There are 2 key objectives of the Act which have significant implications to Payers, Providers and Technology Solutions Providers.

  1. Provide seamless exchange of data in order to provide efficient co-ordinated care which will lead to better outcomes and considerable reduction in administrative overheads and redundant service delivery expenses.
  2. Create a system conducive to capturing of clinical and historical claims data of patients in a secure environment for better predictive analysis and risk assessment.

Currently stake holders are incentivized to utilize EHR and HIT. However once the compliance deadline approaches, non-compliant organizations will be penalized.

Both these objectives require effective utilization of Technology and Data Management tools which will create opportunities for Technology Solutions Providers.

The next blog post in this series of 4 will discuss some of the trends that are emerging as the government and organizations seek methods to cope with the challenges and work with the regulations discussed here.

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