Patient Protection and Affordable Care Act

The healthcare reform legislation, the Patient Protection and Affordable Care Act (PPACA), and other recent amendments impact hospitals and other medical providers in a variety of ways. A few of the key items in the legislation are as follows:


  1. In 2012, benchmarks will vary from 115 percent of spending in low cost areas to 95 percent of spending in high cost areas.
  2. Medicare Advantage plans will be required to spend at least 85 percent of revenue on medical costs. To the extent expenditures on profit and overhead exceed 15 percent of revenue, a rebate will be required to be remitted to Health and Human Services.
  3. Effective for fiscal year 2014, the legislation reduces disproportionate share hospital payments.
  4. The Market Basket reduction has been revised. These revisions impact inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospitals.
  5. Certain exceptions exist for physician owned hospitals that treat the highest percentage of Medicaid patients in their county.


  1. Provides federal Medicaid matching payments for the costs of services to newly eligible individuals.
  2. Payment rates to primary care physicians providing primary care services will be no less than the Medicaid payment rates in fiscal years 2013 and 2014.
  3. HHS is required to develop a methodology for reducing Disproportionate Share Hospital allotments to achieve the mandated reductions.

Other provisions, benefits, and costs

  1. Makes key investments in training doctors, nurses and other healthcare providers.
  2. Invests in the National Health Services Corps’ scholarship and loan repayment programs to expand the healthcare workforce.
  3. Provides funds to build new and expand existing community health centers, and expands funding for scholarships and loan repayments for primary care practitioners working underserved areas.
  4. A two-year temporary credit subject to an overall cap of $1 billion to encourage investments in new therapies to prevent, diagnose, and treat acute and chronic diseases. The credit would be available for qualifying investments made in 2009 and 2010.
  5. Establishes a non-profit entity to identify priorities in patient-centered outcomes research and oversee analytics regarding effectiveness of treatments to assist doctors in treating patients.
  6. Tax-Exempt -501(c)(3) hospitals would be required to: conduct a community health needs assessment every three years; implement a financial assistance policy; limit charges to certain patients to amounts generally billed to insured patients; and follow certain debt collection practices.
  7. Establishes requirements for community mental health centers that provide Medicare partial hospitalization services.
  8. Applies an excise tax of 2.3 percent on the sale of medical devices by a manufacturer or importer.