The bill would not roll back the ACA’s $289.5 billion in coming Medicare payment cuts.


March 8—Seven national hospital advocacy organizations formally opposed a new bill to repeal and replace much of the Affordable Care Act (ACA).

In letters to Congress this week, hospital organizations raised concerns about a range of adverse financial effects from the bill, called the American Health Care Act (AHCA), which two House committees were expected to approve Wednesday.

The American Hospital Association (AHA), America’s Essential Hospitals (AEH), the Association of American Medical Colleges, the Catholic Health Association of the United States (CHA), the Children’s Hospital Association, the Federation of American Hospitals (FAH), and the National Association of Psychiatric Health Systems opposed the bill in a March 8 letter to members of Congress.

The organizations, which generally backed passage of the ACA, cited various factors behind their opposition to the new bill, including “tremendous instability for those seeking affordable coverage,” changes to Medicaid, and the proposed continuation of the ACA’s cuts to Medicare provider payments.

“As a result, we cannot support the American Health Care Act as currently written,” they wrote.

The effects of the bill have not yet been assessed by the nonpartisan Congressional Budget Office (CBO). The hospitals’ analysis was that it “is likely to result in a substantial reduction in the number of Americans able to buy affordable health insurance or maintain coverage under the Medicaid program.” The changes could impact coverage for 21 million Americans who the hospital groups say gained access to health care through the ACA marketplaces and expansion of the Medicaid program.

A March 8 assessment from Fitch Ratings concluded that the medium-term consequences of the AHCA are unclear without a CBO score.

However, a March 7 analysis by S&P Global Market Intelligence concluded the AHCA would cut marketplace enrollments by 2 to 4 million and Medicaid enrollments by 4 to 6 million.

A March 7 Fitch analysis noted potential hospital impacts if states have to take on a greater share of Medicaid funding.

“Hospital and skilled nursing home providers would be at risk of reduced coverage eligibility, reduced reimbursement for services provided or both,” Fitch analysts wrote.

The hospital groups also sent individual letters to Congress outlining specific concerns.

A letter from Richard Pollack, president and CEO of the AHA, opposed the bill’s structural changes to Medicaid, which would be shifted from open-ended federal funding with no limits on federal matching to per capita federal funding based on a weighted average of the program’s four eligibility categories. Pollack said there are better ways to reduce Medicaid spending.

“For instance, the expanded use of waivers—with appropriate safeguards—can be very effective in allowing state flexibility to foster creative approaches and can improve the program more effectively than through imposing per-capita caps,” Pollack wrote.

Tom Price, secretary of the U.S. Department of Health and Human Services, said in a letter to members of Congress that increased Medicaid flexibility for states was not included in the bill due to the limits of the reconciliation rules, which would allow the bill to pass the Senate on a majority vote.

“Future administrative actions will help provide more options for patients, give states flexibility on how they spend their Medicaid dollars, and ensure a stable transition to any law Congress passes,” Price wrote.

The CHA also highlighted the financial impacts of the bill’s Medicaid provisions, including a cap on federal financing and the creation of “barriers to initial and continuing Medicaid enrollment.”

“This will substantially increase the number of uninsured people and uncompensated care costs for safety net providers,” Sister Carol Keehan, president and CEO of the CHA, said in a written statement.

Among the FAH’s criticisms of the legislation was that it would allow for the continuation of the ACA’s “productivity adjustments” to Medicare payments. The ACA’s Medicare cuts will cost hospitals $289.5 billion from 2018 to 2026, according to an analysis commissioned by the AHA and the FAH.

“These cuts are tantamount to the taxes that the AHCA fully eliminates, and should be treated in a like manner since they were both imposed for the sole purpose of funding a coverage expansion,” Charles Kahn III, president and CEO of the FAH, wrote in a letter to Congress.

Supported Provisions

One provision of AHCA that drew hospital support was its restoration of some ACA cuts to disproportionate share hospital (DSH) payments. The bill would immediately repeal the ACA’s Medicaid DSH cuts for the 19 states that did not expand Medicaid eligibility; those cuts were previously delayed by Congress and are currently slated to start in FY18. The bill would repeal the cuts for expansion states beginning in FY20.

“While Congress has wisely chosen to delay these cuts—which amount to $42 billion over the next 10 years—essential hospitals have continued to live under the cloud of a future DSH cliff,” Bruce Siegel, MD, president and CEO of AEH, wrote in a letter to Congress. “This legislation ultimately removes that cloud and would help essential hospitals meet their missions.”

However, Siegel warned against allowing two more years of Medicaid DSH cuts in the 31 expansion states.

The bill also does not restore the ACA’s Medicare DSH cuts, which already have begun.

The ACA’s Medicare and Medicaid DSH cuts total $102.9 billion from 2018 to 2026, according to the analysis by Dobson DaVanso on behalf of the AHA and the FAH.

AEH also supported the bill’s $10 billion in safety-net funding from 2018 through 2022 for providers in non-expansion states but urged that the funding continue beyond 2022. States would determine both payment amounts and eligible providers, which could include any hospital, clinic, or physician serving the Medicaid population.

Although details are needed on how such funding would be used to support providers, Siegel wrote, the provision “might help our hospitals in non-expansion states to continue to provide high-quality care to all patients.”

Changes Possible

Price noted in his letter that the Trump administration would work with Congress on “appropriate changes,” and the hospital groups expressed hope that changes could address their concerns.

“We recognize this measure represents the first step in a process,” Pollack wrote. “It is critical that this process be thoughtful and focused on finding ways to improve our health care system, particularly for the poor, elderly and disabled.”


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, March 08, 2017