Affordable Care Act – Implications for Medical Practices

Affordable Care Act pie chart

It’s been over three years since the passage of the Patient Protection and Affordable Care Act (PPACA), the Affordable Care Act (ACA) for short.  It seems like a good time to review how some of the major provisions of the Affordable Care Act affect medical practices.

The Affordable Care Act can affect Medical practices several ways

As with most new healthcare laws, including those directed at healthcare reform, the impact on providers can be far reaching.  The following points demonstrate a few of the ways in which medical practices can be affected by the implementation of the Affordable Care Act.

  • They may have employees who are subject to mandates to purchase coverage.
  • They are small businesses who may have the opportunity to shop in health insurance exchanges.
  • They may operate self-insured plans which will be required to provide specific benefits in order to qualify as providing coverage for their employees.
  • As providers, they need to understand the benefits available to patients and the restrictions on certain types of medical providers.


Even a summary of the Affordable Care Act and its impact on medical practices could go on for many pages.  Here we will review some of the more important provisions.

  • Medical providers need to make sure they are billing and collecting appropriately for the new patient benefits provided under the Affordable Care Act.
  • They should be aware that there’s been an elimination of lifetime benefit limits for most health insurance plans and there is an approaching elimination of annual benefit limits for health insurance plans beginning in 2014.
  • There are no co-pays or deductibles for preventive services available to patients covered by Medicare and by commercial insurance or HMO plans. This means the plan will pay a higher rate, absorbing the cost of the co-pay or deductible.

The PPACA impacts both Medicare and Medicaid as well

Medicare and Medicaid represent a huge portion of the payor pool, and The Affordable Care Act makes several changes to these payment systems.

  • There were certain technical provisions in the Affordable Care Act affecting Medicare reimbursement for diagnostic imaging services, in particular reducing the rate paid for subsequent imaging procedures from 50% to 25%.
  • Various preventive services for Medicare patients, including certain screening services and the New to Medicare Exam will be paid at 100% of the Medicare allowable fee schedule for those services.
  • Primary care incentive payments: Under this provision of the Affordable Care Act, primary care physicians will be paid a 10% bonus for their office-based services provided to Medicare beneficiaries.
  • General surgeons in health physician shortage areas will receive a 10% bonus for major procedures they perform on Medicare patients.
  • There are new limits on reimbursement for MRI and CT scans performed in physician practices.

There was also an important change in Medicaid reimbursement under the Affordable Care Act.  Family practitioners, internists and pediatricians will be paid at Medicare rates for their services provided to Medicaid beneficiaries for 2013 and 2014.  This represents an increase in payment anywhere from 30 to 50% for these PCPs.

Compliance provisions in the Affordable Care Act

As should be expected, there are several compliance related provisions in the Affordable Care Act.  These provisions need to be quickly integrated into your organization’s Compliance Plan and policies, as appropriate.

  • Physicians who are referring patients to CT or MRI facilities which they own, or to certain other in-office ancillary services, must disclose their ownership and give patients a list of alternative suppliers.
  • Physicians are prohibited from new ownership or new investments in any acute care hospital as of December 31, 2010.
  • The Department of Health and Human Services must have a self-disclosure protocol for potential Stark violations reportable by healthcare providers.
  • Claims submitted that are related to services later deemed to be violating the anti-kickback statutes, will be considered false claims. This is important because there are severe penalties for submitting false claims to the federal government.
  • Claims to the Medicare and Medicaid programs must be submitted within one calendar year of the date of service.
  • Over-payments from Medicare or Medicaid must be returned within 60 days after the overpayment is identified. This means medical practices definitely should document when they determine an overpayment has been made and take steps to return it if the Medicare payor does not recoup the payment within the 60 days.
  • Regulations are to be issued requiring new provider applicants to Medicare or Medicaid to have compliance programs in place. It is not known if group practices adding new provider members may be subject to this requirement when they add a new provider to Medicare within their group. If the regulation requires this, then many medical practices which have not had formal compliance plans or programs in place will be required to implement them prior to adding new provider partners or employees.

PPACA,  RVU’s, and PQRI … more than just acronyms

The introduction of value-based payment systems is another important feature of the Affordable Care Act.

  • Physician payment levels will be determined in part by the quality performance measures submitted to CMS via CPT code modifiers.  Physicians are expected to submit these modifiers with their claims for services in 2014, and the modifiers submitted will influence individual physician payment levels in 2015.
  • A major pilot program will be established to test the bundling of payments for episodes of care.  In this program, services to be bundled may include physician services, hospital services and post-acute services for up to 30 days following discharge from hospital. This program will require participating providers to develop ways to share the bundled payment for each episode of care. It remains to be seen what effect such a program will have on utilization of services, and long-term payments for services.


The Affordable Care Act makes several changes in the Physician Quality Reporting Initiative.

  • For 2011 the bonus for reporting PQRI quality data was 1% of Medicare allowable charges accumulated by the practice.
  • For the years 2012 through 2014, the bonus for reporting quality indicators will be one half of one percent of Medicare allowable charges.
  • Providers may submit quality reporting indicators by including information on claims submitted to CMS or through participating in a Maintenance of Certification program.

Misconceptions about the Affordable Care Act

There has also been a great deal of misinformation about the provisions and effects of the Affordable Care Act.

  • The Affordable Care Act doesn’t replace employer-based or individual healthcare insurance mechanisms.
  • The Affordable Care Act doesn’t fundamentally change Medicare or Medicaid.
  • The Affordable Care Act doesn’t alter or preempt state regulations of healthcare professions or healthcare institutions.


Some final thoughts …  The Affordable Care Act includes many provisions designed to increase access, decrease costs, and expand benefits to millions of Americans.  Time will tell if it will work as planned.  But in the meantime, medical practices need to plan on integrating these changes into their daily routines.


When you need proven expertise and performance

Jim Hook, MPH

Mr. James D. Hook has over 30 years of healthcare executive management and consulting experience in medical groups, hospitals, IPA’s, MSO’s, and other healthcare organizations.