The Impact of Healthcare Reform on the ARM Industry

For the accounts receivable management industry (ARM), like the rest of the country, the prospect of healthcare reform since the fall of 2008 has gone from “if” to “when” to “maybe” to “never” to “now.” Today the central question for healthcare ARM professionals is “what’s next?” and “how will the newly enacted legislation impact healthcare collections?”

Scores of consumer-focused articles, interactive tools, timelines, and info graphics have been published in the weeks since the Patient Protection and Affordable Care Act was signed into law. InsideARM.com highlighted the perspectives of several healthcare finance and ARM professionals on the significance of reform as well (“Professionals Share Thoughts on Health Care Reform Impact,” March 24, 2010). Most ARM companies are impacted by any change in self-pay collections, so I’ve highlighted an abbreviated list of key insurance reform provisions most likely to affect true self-pay collections over the next four years:

2010

• Dependant coverage extended to age 26 for individual and group policies
• Small business tax credits for companies with fewer than 25 employees and average salaries less than $50K
• End to lifetime limits on coverage
• Establishment of high-risk insurance pool for individuals with pre-existing conditions

2011-2012

• Few insurance reforms

2013

• CO-OP program created to set up member-guided, non-profit insurance companies in all states and Washington DC

2014

• Require citizens and legal residents of the U.S. to carry qualifying insurance coverage
• Establish state-based insurance exchanges
• Abolishment of pre-existing conditions exclusions
• Penalties for businesses with more than 50 workers that fail to offer coverage to employees
• Reduction of some out of pocket limits based on income and Federal Poverty Level

Given the fact that current placement volumes to medical collection agencies and demand for outsourced revenue cycle management services remain historically high; the short-term prognosis for healthcare ARM is nothing short of stable. Longer-term projections for this market are also encouraging, considering the fact that the number of uninsured patients is unlikely to change before 2014; any reduction in delinquent self-pay receivables will lag months to years behind; and that new collection opportunities are likely to materialize as a result of insurance reform.

The Patient Protection and Affordable Care Act has coincidentally produced an important maxim for healthcare receivables management firms: Time is on your side. For healthcare ARM companies with concerns about the future of their businesses, the bill’s implementation timeline allows some breathing room to sort through those issues. For companies that have already set their sights on taking full advantage of market opportunities in the wake of reform, strategic planning for the next 3-5 years and beyond can begin at once.

Michael Klozotsky conducts market analysis on the accounts receivable management industry, with a focus in the healthcare sector. Contact Michael by email or at 240-499-3836.