Mark Farrah Associates, a leading provider of market data and intelligence solutions, found health insurance companies across the U.S. are altering their vendor management policies. One reason is due to Section 9006 Expansion of Information Reporting Requirements, under the Patient Protection and Affordable Care Act (PPACA). The provision changes the Internal Revenue Service (IRS) rules on 1099 reporting; beginning in 2012, businesses must send the IRS a 1099 form for every vendor or service provider with which they have had at least $600 in total aggregate transactions during the year. While many vendors thought this section of PPACA would be repealed, Congress has not done so yet.
As the fulcrum point between patients and health care providers -- health insurance companies have historically been an attractive segment to do business with. In 2009, the health insurance industry reported an aggregate of $454 billion in revenue. Approximately $395 billion paid for medical expenses. Another $49 billion was spent on administrative expenses.
Information technology vendors and consultants are just a few of the many companies that depend on dollars expended by health plans for administrative services. A larger number of vendors, e.g., physicians and other health practitioners receive medical expense dollars. Pharmaceutical manufacturers, medical equipment vendors and biotech companies are also paid by insurance carriers. These are only a few examples of the multitude of vendors from whom health insurance companies purchase goods and services. The burden of Form 1099 distribution across the health care supply chain is mind boggling.
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