Supreme Court Ruling Brings More Certainty to Healthcare Planning


Archived Published: 03 July 2012 ID: G00234306

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Summary

The new clarity provided by the U.S. Supreme Court's ruling on the Affordable Care Act means that healthcare payers, providers and state governments should proceed aggressively with their IT investment plans.

News Analysis

Event

On 28 June 2012, the U.S. Supreme Court ruled that key provisions of the Patient Protection and Affordable Care Act — known as the Affordable Care Act (ACA) — are constitutional. The law is scheduled to come into substantial effect on 1 January 2014.

Analysis

This ruling ends a long period of uncertainty for U.S. healthcare stakeholders. The act could still be modified or revised, and could be affected by the November 2012 federal elections. However, the ruling is sufficiently definitive for interested parties to stay the course with planned investments in IT to support the delivery of new and vastly expanded healthcare services.

Healthcare payers will need to scale their systems to handle a dramatic increase in the number of insured members. Much of this new membership will come through health insurance exchanges (HIXs). HIXs will transfer eligibility and related subsidy information to health plans in still-undetermined information transfer arrangements. Strategies for managing care, paying for health outcomes and aggregating resulting data must be resolved. New forms of payer-provider collaboration, including accountable care and patient-centered medical homes, must also be developed.

Healthcare providers, too, can expect an increase in their workloads. However, some provisions anticipate that they will treat people at earlier stages in the development of health conditions, because they will no longer postpone treatment for extended periods. Providers may experience lower levels of bad debts but be paid less for their work. This situation would likely strain their revenues while possibly easing cash flow.

State governments must submit HIX blueprints to the Centers for Medicare & Medicaid Services (CMS) by 16 November 2012 for implementing their own state-based exchanges, participating in federal-state partnership exchanges or accepting federally facilitated exchanges operating in their state insurance market. Federal approval or conditional approval of state exchange plans will be granted for state-based exchanges by 1 January 2013. Even those states making the most progress toward building self-administrated exchanges will only roll out solutions with limited functionality by 1 October 2013.

Recommendations

Healthcare payers:

  • Continue with investments to handle large increases in the numbers of members.

  • Determine methods of receiving and using data from one and perhaps many HIXs.

  • Initiate new ways to analyze patient outcomes by aggregating the data of healthcare providers to explore new delivery models or even the acquisition of care providers.

  • Develop new business models predicated on these changes in IT processes, business operations and strategic goals.

Healthcare providers:

  • Continue with investments to handle large increases in the numbers of patients.

  • Prepare to handle less-advanced health conditions.

  • Plan how to minimize the impact of more transactions of lower values but with less risk of defaults.

State governments:

  • Determine the fastest path to acquire the five core exchange functions: consumer assistance, health plan management, eligibility, enrollment and financial management.

  • Choose the exchange functions the state can most successfully manage.

  • Expedite arrangements to work with the CMS to share select business functions, or procure services from commercial vendors.

  • Implement exchanges with contingency plans for process workarounds, iteratively expanding capabilities according to a post-release exchange product road map.

  • Take advantage of enhanced federal funding to modernize the state's health and human services IT infrastructure, including integrated eligibility determination and enrollment systems.

Additional research contribution: Thomas Handler

Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

"Healthcare Payers Must Embrace a New Business Model to Manage Disruptive Change" — A transaction-focused business model will not work in today's rapidly changing healthcare marketplace. By Robert Booz

"The Uncertain Path to Implementing State Health Insurance Exchanges" — Few states are on track to have a health insurance exchange ready by the date mandated by the ACA. By Rick Howard

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