How Does Health Care Reform Affect the Operation of Sleep Centers?

How will health care affect your business?

President Obama’s recent health care reform legislation has implications for citizens, hospitals, private medical practitioners and sleep centers. The changes proposed cover key areas of funding, reimbursement, clinical operations, requirements for transparent operations and oversight measures. This is expected to translate into higher primary care and Medicaid funding, more reporting requirements and a hike in taxes levied on medical equipment. Here’s an examination of the legislative changes that can affect your business. 

Insurance coverage: The proposed health care reform bill requires citizens to acquire medical insurance failing which a tax penalty will be levied on them. This is one of the positive health care benefits for citizens and also a positive development for hospitals and sleep centers as it reduces the funds expended to provide unreimbursed care. By 2019, over 30 million people who were formerly uninsured are expected to be covered, thus encouraging more admissions in sleep centers and hospitals while bringing down the charity care that these medical institutions provide.

Pay for performance: A pay for performance rule established by the health care policies will affect hospitals, sleep labs, imaging centers and surgery centers, among others. This is much like the VBP or value-based purchasing that the CMS (Center for Medicare and Medicaid Services) is presently evaluating. According to this, a certain percentage of the payments made to the sleep center will depend on its performance, based on some set quality measures. Putting the quality measures in place and the related reporting requirements could drive up administrative costs. However, increased payments that result when the sleep center exceeds or meets the performance standards, could offset these costs.

Physician-owned sleep centers: The business structure of a sleep lab can be any one of the following (a) owned by a hospital (b) an IDTF or independent diagnostic and testing facility or (c) physician-owned/extension of a physician’s medical practice. Physicians can partially or fully own IDTFs or hospital-associated labs too. The new health care reform will place limitations on physician-owned sleep centers. For existing ones, the cumulative percentage of physician ownership cannot increase from present levels, and procedure rooms and beds cannot be added. The requirement for obtaining the Medicare provider number for under-construction and newly constructed physician-owned sleep centers was set under the proposed health care reform bill last year.

Public listing of charges: All sleep centers operating in the country are required to establish, make public and update the charges for services and items provided. This is one among the positive health care benefits as far as individuals are concerned but implementation of this provision can result in increased costs of administration for sleep labs and centers. Such health care policies can also impact health plan negotiations, and have an effect on the competitiveness of sleep centers within the communities where they operate.

Direct impact of new CMS regulations

One of the new CMS regulations has to do with Medicare re-validation and enrolment processes for sleep centers and homecare companies to prevent the abuse and fraud in the Medicare program. Insufficiently qualified suppliers and providers or those posing risks of a financial nature to Medicaid will see their billing privileges revoked or denied. The new CMS regulations require that Medicaid providers update ownership change, location change or/and general supervision change in their enrollment data within thirty days or face a revocation of Medicaid billing privileges.

The Centers for Medicare and Medicaid (CMS) also recently proposed a payment regulation that will allow hospitals, sleep centers, health care professionals and physicians to form networks and co-ordinate patient healthcare, and share the savings generated for the US government by ensuring that the Medicare patients are kept healthy.

According to this CMS regulation, ACOs (accountable care organizations) can realize cost benefits by investing in patient health and providing a higher level of healthcare. This is an opportunity for ACOs to reduce costs whilst bringing about improvements in patient care co-ordination service levels through a healthy participation.

Leveraging the changes to your benefit

While it may seem that the healthcare reform will reduce the payments for medical providers in return for their services, the focus is on improving quality of healthcare and ushering in greater transparency among providers. Value and quality based payment systems and other fraud-prevention measures will help sleeps centers and hospitals step up their game and invest their energy into offering the best possible services. Also, the reform encourages the formation of joint ventures to co-manage patient health, enable economies of scale, and offer greater bargaining powers with insurance companies and employer-based healthcare plans.


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