What Obamacare Means for Medical Sales & Other Healthcare Professionals
The Patient Protection and Affordable Care Act (PPACA), a piece of legislation signed into law on March 23, 2010, has been brought back into the national spotlight as President Obama begins his second term as President of the United States. The stated goals of the PPACA, also known as Obamacare, are to protect healthcare consumers by introducing a series of policy reforms designed to lower consumer costs and to hold insurance companies to higher standards of accountability. Opinions vary on how effective the Affordable Care Act can be, but the various elements of the bill are certain to lead to significant changes for professionals throughout the medical industry, including those in medical sales.
Many PPACA policies have already had a decided impact on medical sales. For example, a recently implemented 2.3 percent excise tax (a tax collected on goods and services, rather than income or real estate) on medical devices has caused premier manufacturers to shut down operations, thus putting salespeople and others out of work. One major medical device manufacturer estimates the new tax will cut its profits by $20 million to $30 million a year. Conversely, an element of the Affordable Care Act that calls for strengthening community health centers has funneled $11 billion into revitalizing these facilities and helped restock them with new equipment. Community Health Centers are also now mandated to provide dental care, which has provided a brand new outlet for workers in dental equipment sales.
In more broad terms, there is a growing worry among healthcare professionals that increased government control over the field may have an impact on young people. One report suggests that a career as a healthcare provider may become less desirable, which would affect medical school enrollment and the number of new doctors entering the work force.
The Affordable Care Act is a complex piece of legislation and, as evidenced from the examples above, its impact on medical sales is difficult to define in broad terms. It is crucial to first understand each element of the PPACA and then determine how specific medical sales jobs will be affected.
What’s Changing in 2013
Many of the PPACA’s largest developments are scheduled to go into effect in 2013. Here, we highlight some of the most impactful changes and how they’ll affect medical sales professionals:
Improving Preventive Health Coverage
One of the big changes resulting from the Affordable Care Act lies in the Medicaid payments offered to healthcare providers in exchange for preventive services including hypertension screenings, immunizations, and gynecological check ups. Free preventive care for seniors on Medicare went into effect in January of 2011, but in early 2013, those same benefits will be made available to consumers under the age of 65 on Medicaid.
Increasing Medicaid Payments for Primary Care Doctors
In a separate effort to increase reimbursements for primary care doctors, the Affordable Care Act mandates state Medicaid programs to match no less than 100% of Medicare payment rates. Previous reimbursement systems matched about 59% of Medicare rates, on average.
Expanded Authority to Bundle Payments
Over 90 percent of primary care revenue in the United States is generated through a fee-per-service arrangement. This means separate bills and claims for consults, surgeries, post-ops, and other specialty services along the way. The Bundled Payments initiative was designed to streamline care by issuing a lump sum payment to hospitals, which will then distribute the funds to physicians and specialists involved in any single “instance of care”.
What’s Changing in 2014 and Beyond
Establishing Affordable Insurance Exchanges
Beginning in 2014, the Affordable Care Act will create consumer insurance marketplaces, called exchanges, whose goal is to boost transparency and competition amongst insurers. These exchanges will be state-managed and include regulations designed to protect consumers, including prohibiting insurance companies from denying coverage based on pre-existing conditions. The new healthcare marketplace will hopefully force insurance companies to offer their best prices as a result of the consumer’s ability to comparison shop.
Promoting Individual Responsibility
One of the most famous and controversial elements of the Affordable Care Act is the mandate that all citizens must be enrolled in a health plan by 2014 or face financial penalties ($95 or 1% of income in 2014, $325 or 2% in 2015, $695 or 2.5% in 2016). Exemptions apply to individuals belonging to certain religious divisions or those whose household income falls below the federal poverty line or for whom the lowest-cost plan exceeds 8 percent of income.
Increasing Access to Medicaid
In an effort to mitigate costs for consumers at or near the poverty line, the Affordable Care Act will raise the ceiling for Medicaid qualification. Americans who earn less than 133% of the poverty level (or about $30,000 for a family of four) will be eligible to enroll as of January 1, 2014. Income limits have typically been set at the state-level to coincide with the poverty line, but this legislation will ease requirements across the board, offering easier access to coverage for many Americans. Additionally, states will be federally compensated for the difference in coverage costs until 2017.
Eliminating Annual Limits on Insurance Coverage
Many insurance plans currently place a cap on claim payouts; meaning, once that limit is reached, the insured individual will be unable to receive additional benefits. He or she may even be dropped from the plan altogether. As part of the guidelines regulating public insurance exchanges, the Affordable Care Act will prohibit new and existing plans from enforcing annual limits on the amount of coverage a person can receive.
Since 2012, a tiered system of fees, discounts, and rebates has been in place for the pharmaceutical industry. Aside from being required to offer prescription drugs to Medicare patients at significantly reduced costs, pharmaceutical companies will face increased government fees – fees that will continue to grow until 2019. (Breakdown of taxes: $2.5 billion for 2011, $2.8 billion per year for 2012 and 2013, $3.0 billion per year for 2014 through 2016, $4 billion for 2017, $4.1 billion for 2018, and $2.8 billion for 2019 and beyond, along with Medicare subsidies that provide 75% discounts on certain drugs by 2020.)
The Big Picture
The financial, social, and political impact of the Patient Protection and Affordable Care Act is difficult to quantify. The full effects of its legislation won’t be felt for years. The best we can do, at this point, is to make predictions using the information available.
Most reforms that are expected to positively impact the medical sales industry fall into one of two categories:
Increased Patient Volume
One recent survey found that 58% of people had put off or avoided necessary healthcare in the past year due to high costs. This helps paint a picture of the financial burdens a person with AIDS, hemophilia, or other chronic conditions could face. These patients are likely to avoid care, particularly dental or ocular, in order to avoid hitting their claim ceilings. The elimination of this threat in 2014 will open the door for increased volume for non-emergency medical providers. Additionally, increased access to Medicaid, the nationwide mandate requiring individuals to purchase health insurance, and free preventive health coverage for non-seniors will inflate the number of patients seeking medical care in the coming years.
Regardless of the moral or political implications of these reforms, nearly 30 million people will gain access to healthcare coverage over the next year. The volume of patients moving through the medical system will be significantly greater than in years past which will lead to increased opportunity for those in medical sales professions. In particular, those specializing in the sale of non-emergency equipment (preventive medicine supplies, dental equipment, and others) stand to benefit.
Many of the Affordable Care Act’s reforms focus on adjusting provider reimbursements. For example, increased Medicaid payments are designed to encourage doctors to take on more Medicaid patients. In the past, it wasn’t uncommon for doctors to refuse Medicaid coverage for fear of losing profit or even suffering losses by treating those patients. Increased reimbursement rates for providers will mean an increased ability to purchase new equipment and supplies. Additionally, initiatives promoting bundled provider payments are designed to streamline care and will allow providers more freedom in the equipment and services they choose to purchase from medical sales representatives.
Certain segments of medical sales will likely have difficulties in the coming years. Pharmaceuticals, in particular, will be hit with inflated taxes and fees that will directly impact employment at affected companies. Industry leaders expect the Affordable Care Act to carry an $85 billion price tag for pharmaceutical companies over the next 10 years.
Indirectly, increased government control in the medical industry could discourage the development of new doctors. These potential medical providers are tomorrow’s customers, the ones in line to make equipment and supply purchases. If America sees a dip in the number of qualified doctors coming out of school, the entire industry could suffer. Medical sales representatives may also struggle as the workload of existing doctors increases and their ability to schedule meetings and product demos becomes hindered.
It’s important to remember that the ripple effects of the Affordable Care Act aren’t fully knowable. All projections, predictions, and forecasts are subject to change as the medical landscape evolves. In the meantime, keep a close eye on MedReps.com for all the latest news regarding medical sales jobs.