The Affordable Care Act and Your Facility

January 31st, 2013

The re-election of Barack Obama has pretty much settled the fate of the Affordable Care Act – there is no question now that Obama’s signature legislation will go into effect.

And that will mean increased costs for many medical facilities that use contingent labor. However, because of the nature of contingent work, it is unclear how much the extra costs will be, and how much will be shouldered by staffing agencies and medical facilities.

The Affordable Care Act (ACT) requires employer coverage for full-time employees. The alternative is that the employer pays financial penalties for not providing coverage. The ACT sets full-time status at 30 hours a week on average.

The ACT also makes no distinction between temporary and permanent employees.  This creates problems in assessing the status of contingent workers, whether they meet this threshold or not. And this has created differing assessments of the costs incurred – on average, medical facilities have said they expect to absorb about 15 percent of the increased costs, while staffing firms have said they expect to pass along about 65 percent of the increased costs to healthcare organizations.

The government has, however, provided some guidance, saying it will allow employers to use a 12-month measurement period to determine if contingent workers are full time. These guidelines extend through 2014.

Moreover, given the increased demand for healthcare as more people enter the system, analysts are projecting that the healthcare staffing market will grow by 8 percent in 2013. With the combination of healthcare reform and the aging of baby boomers and their retirement, there will be a huge demand for healthcare workers among both healthcare providers and staffing firms.

Staffing firms will incur higher costs from providing insurance to their workers or by paying the penalties instead, and they will want healthcare organizations to shoulder some of the increased costs. But these costs are different from regular payroll taxes, so current contracts won’t have provisions for them. As a result, experts say staffing firms and healthcare providers need to get together as soon as possible to figure out how they will allocate these costs. The breakdown could range from staffing firms paying for all of the increased costs, to the providers absorbing all the costs, to something in between.

Staffing companies probably will bring up healthcare reform costs as contracts come up for negotiation with providers. So, providers should project what costs might be coming and work from those projections, using historical data regarding length of assignment and hours worked.

If you’ve partnered with a staffing firm, have you and its leadership discussed how the increased costs of the ACT will be split between you? If so, how did it go?

If you’d like to discuss the increased costs associated with the ACT with us, don’t hesitate to contact us. All of us at Morgan Hunter Healthcare are here to make your staffing life easier. Contact us today.

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