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2013: Affordable Care Act brings new taxes, increased payments for doctors

While most eyes are on Jan. 1, 2014, as the date the largest effects of the Affordable Care Act land, 2013 is the year of behind-the-scenes work with few obvious changes.

This year, taxes on some kinds of income and on manufacturers of certain medical devices are going up. So are Medicaid payments to doctors for primary care.

∎ First, some paperwork:

In 2013, lawmakers and bureaucrats need to write the guidelines for the pending Medicaid expansion, launching in 2014. This is also the year states have to declare what form of health insurance exchange they will pursue, whether it’s a partnership with the federal government, a state-run exchange or a federally designed exchange.

So far, New Hampshire hasn’t announced, but it is subject to a state law forbidding a state-run exchange. If the state pursues a partnership exchange, 2013 will be the year the technology work is done to launch next year.

∎ Increased primary care payments:

The most exciting change this year affects health care providers, said Paula Minehan, the vice president for finance and rural hospitals at the New Hampshire Hospital Association.

The law, effective Jan. 1, requires that states pay the same rate for primary care treatment for Medicaid patients as they do for Medicare patients. The federal government is picking up the difference for the first two years, after which the state will be responsible for 50 percent of the cost.

New Hampshire hasn’t started writing the larger checks yet, but officials in the Department of Health and Human Services are reading through the new federal guidelines issued last month and plan to implement them soon, said Lisabritt Solsky, the state’s deputy Medicaid director.

While providers are thrilled with the higher payment plan, they are already cautiously eyeing the calendar, wondering what will happen when the federal money dries up.

“There’s no guarantee and no requirement it continue, so we are concerned it could evaporate,” Minehan said. “But by then hopefully the Medicaid expansion will have been implemented, we’ll be operating under managed Medicaid, it will be a new day and maybe by then the economy will have picked up. A lot can change in two years.”

∎ New, increased taxes:

Of the health care law’s 2013 provisions, several mean increased taxes for someone.

As of Jan. 1, tax on wages above $200,000 increased by 0.9 percent, and unearned income is subject to a new 3.8 percent increase. Over 10 years, those two taxes are expected to provide $200 billion to pay for many provisions of the health care law.

Another tax, possibly bringing in $20 billion over 10 years, is focused on durable medical equipment bought by hospitals and doctors’ offices such as hospital beds, pacemakers and CT scan machines. There is also an exemption for devices that are generally purchased by the general public for individual use, like eyeglasses or contact lenses. The exemption applies to most of the refurbished medical devices sold by ATECH Services in Concord, a division of the Crotched Mountain Foundation.

A website set up by industry insiders predicts six companies will pay 49.5 percent of the total tax collected on the devices. Officials at Johnson & Johnson, the largest manufacturer of medical devices in the country, expect to pay as much as $262 million this year.

∎ More paperwork, optional this time:

The act gives hospitals a choice in the way they process paperwork for Medicare and Medicaid patients, opening up an option called bundling, where, for example, instead of a surgical procedure generating multiple claims from multiple providers, the entire team is compensated with a single payment that provides incentives to deliver health care services more efficiently.

The switch is technologically complicated and no New Hampshire hospitals have pursued it, Minehan said.

(Sarah Palermo can be reached at 369-3322 or
spalermo@cmonitor.com or on Twitter @SPalermoNews.)

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