Understanding the Affordable Care Act

The Affordable Care Act is now a fact of life for those in the health care industry and beyond. In the five years since it went into effect, it has faced numerous challenges and, to this point, has defeated them all. The latest legal challenge was King v. Burwell, which ultimately resulted in the Supreme Court upholding language in the ACA that allows federal subsidy eligibility for enrollees in states that have their own exchanges.

“The ruling impacts all businesses in states that have elected to set up their own health insurance exchanges,” says Brenda Schluter, a CPA and senior consultant at The Shealy Group. “All enrollees who meet certain federal criteria will be eligible for subsidies in the ACA.”

The Supreme Court’s ruling removed one of the few current remaining roadblocks to full enactment of the ACA and likely means that the ACA will continue to be phased in, as-is, for at least the next few years. There are so many facets to the ACA that it’s difficult for small business owners to keep track of them. For those in the medical field, already responsible for keeping up with an ever-changing stream of compliance and regulatory changes, it’s that much more difficult. Here’s a look at what’s been happening with the ACA, what is coming later and how it will affect your healthcare practice.

Physician Quality Reporting System
The PQRS was originally implemented as part of the Tax Relief and Health Care Act of 2006, with the goal of creating a formalized system for collecting and disseminating information regarding the quality of care provided by hospitals, skilled nursing facilities and other medical care entities. In 2010, the ACA introduced modifications to the PQRS, including the requirement for timely feedback from the system on the performance of enrolled physicians and medical professionals, and the addition of an appeals process for noncompliance. At the start of 2015, the system’s impact was further expanded to include payment penalties for nonparticipation or noncompliance.

“As of the start of this year, the PQRI began requiring satisfactory participation to avoid a 1.5 percent penalty applied to practices as part of their total estimated fees from Medicare Part B,” Schluter says. “That penalty will be increased to 2 percent for 2016.”

The penalties have a two-year lag time and will be phased in. That means 2015 penalties will be assessed based on nonparticipation or noncompliance in 2013. For 2013 infractions, the penalty is 1.5 percent from the Medicare Physician Fee Schedule. In 2016, the penalty for 2014 infractions will be 2 percent.

IRS Form 1095-C
The effects of the ACA hit those in the healthcare industry on two fronts, both as providers and as employers.
As employers, healthcare providers are subject to the same criteria and compliance standards as companies in any other industry. Companies and practices in the healthcare field have to determine how many full-time equivalent employees they employ and report that to the IRS to determine whether they are noncompliant with the ACA. If they are, they are subject to tax penalties. The ACA classifies businesses in three categories — one to 49 employees, 50 to 99 and 100 or more. To declare compliance with the ACA, companies must file several forms with the IRS, due at the beginning and end of February. The mandate applies to companies of 100 or more employees in 2015 and will apply to companies of 50 or more in 2016 and beyond.

“You will need to file Form 1095-C with the IRS, which states your number of full-time employees and outlines the medical insurance you provide,” Schluter says. “Form 1095-C is due Feb. 1, 2016, for 2015 tax purposes, and the additional compliance forms are due on Feb. 29, 2016.”

Overall, those in the medical field should get ready for a new world of healthcare as the ACA becomes fully implemented. The goal of the act is to improve the quality and accessibility of services, but there is no question it makes operating in the healthcare field more complicated.

“One of the biggest aspects of the ACA is the idea of paying physicians based on quality of care instead of volume,” Schluter says. “Medicare reimbursements will be largely tied to that metric moving forward. The ACA is fundamentally changing how health care is provided, and all you can do as a practitioner is stay up on the latest developments, because they are frequently changing.”

For more information on how the Affordable Care Act may affect your healthcare practice, contact Brenda Schluter at

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