CHIP, Medicaid, and ACA marketplaces face cuts but the full impact of repeal on hospitals remains unknown.

Nov. 14—Hospital industry advisors expect a potentially troubling and costly future rife with uncertainty and reimbursement challenges in the wake of the recent election of President-elect Donald Trump and continued Republican control of Congress.

While the Republican-led House of Representatives voted more than 60 times to repeal all or some of the Affordable Care Act (ACA), it was unsuccessful in reversing President Barack Obama’s signature legislative accomplishment. Candidate Trump swore to repeal the ACA and replace it with largely unspecified insurance reforms.

Hospital industry insiders view a complete repeal as unlikely, though promised reversals of the ACA Medicaid expansion and state health insurance marketplaces could cost hospitals billions of dollars in revenue.

Dan Nickelson, a former lobbyist for the Cleveland Clinic, said Trump is new to the legislative process and will rely heavily on congressional leadership.

“I think they all want to move on the ACA,” said Nickelson, who predicted Medicaid expansion will be targeted. “Of course, hospitals supported Medicaid expansion as revenue for what had been mostly uncompensated care. At this point we don’t know how the Trump administration will change that. Historically, Republicans have favored block grants because they limit federal exposure and allow states greater flexibility to cut federal benefits, but that puts the budgetary pressure on states.”

Nickelson said in an interview that the ACA insurance marketplaces also are vulnerable.

“They’ve been very unpopular with Republicans,” Nickelson said. However, popular insurance reforms like parental coverage for adult children to the age of 26 and ending pre-existing condition coverage exclusions will likely remain. And in recent interviews Trump seems to support preserving them.

“Those are actually popular with many people,” said Nickelson, who believes the ACA’s quality initiatives, such as value-based purchasing and other physician- and hospital-payment reforms, will likely continue.

Larry Oday, a healthcare attorney, predicted that the Medicare reimbursement rate cuts that financed the ACA will not be restored.

Under House Speaker Paul Ryan’s plan, insurance marketplace subsidy cuts would be phased in over several years to allow those insured to transition to a still unknown replacement program and get past the 2018 elections, Oday said in an interview.

For hospitals, the ACA’s repeal would mean setting the clock back before Obamacare, Oday said.

“They would be going back to the way things were before,” Oday said, including likely increases in uncompensated care costs.

Bright Spot?

One possible bright spot could come from Congress revisiting the cuts in the hospital disproportionate share rate (DSH) funding phased in under the ACA.

“I would expect hospitals to revisit the DSH formula,” Oday said. “It’s going to be a very interesting and potentially troubling period ahead for hospitals. Most of these changes will have to occur in a reconciliation bill. I would expect to see the repeal of some of the ACA funding taxes, like the tax on Cadillac insurance plans and medical devices, both of which have bipartisan support. I think we’ll see another resolution ‘kicking the can’ into the next congressional session in 2017.”

The Children’s Health Insurance Plan (CHIP) expires Sept. 30, 2017 and must be reauthorized next year, Oday noted. More than 8 million children whose families earned too much to qualify for Medicaid received coverage in 2015. Democratic presidential nominee Hillary Clinton was credited with spearheading the 1997 program.

“Its chances don’t look good,” Oday said. However, “CHIP was [Utah Sen.] Orrin Hatch’s baby. But I wouldn’t be surprised if it is passed, that it could be under reduced spending levels.”

Both the American Hospital Association (AHA) and America’s Essential Hospitals (AEH) issued statements on the election’s expected impacts.

Rick Pollack, president and CEO of AHA, vowed in a statement that organization’s priorities will remain the same following the election.

Pollack urged “advancing the transformation of health care, ensuring access to coverage, preserving adequate resources for health care, protecting patient access to care, enhancing the quality of care and patient safety, and making health care more affordable.”

Bruce Siegel, MD, president and CEO of AEH, wrote in a statement that the safety net hospital association will aim to protect access to high-quality care for vulnerable patients and vital services for communities.

“We must sustain federal support for this mission, reject policy changes that reduce spending at the expense of coverage and access, and continue progress toward transformative approaches to better quality and value,” Siegel said.

Downside Effects

Christopher Kerns, executive director of research for the Advisory Board Company, said hospitals are poised “to suffer all the down-side aspects of repealing the ACA and none of the upsides. Cuts to Medicare reimbursement are not likely to be scaled back and are likely to remain intact, while providers are concerned that coverage expansions will be cut. An outright repeal of the ACA likely means subsidies will be phased out for insurance exchanges and Medicaid expansions.”

Kerns said hospitals also fear that an ACA repeal could doom the investments hospitals have made in care transformation.

“If those reimbursement models, which have been moving from fee for service to risk-based, go away, what happens next?” Kerns said in an interview.

Kerns said that another concern is the uncertainty surrounding access to capital, which has improved since the financial crisis.

“Issues about reimbursement can cast a cloud on hospitals’ ability to access reasonably priced tax exempt debt,” Kerns said.

Hospitals will be eager to see who President Trump selects to head HHS, Kerns said.

“They’ll be watchful for that person’s priorities and the order of events for managing the ACA’s repeal,” Kerns said. He added that the HHS secretary wields great power in interpreting regulations.

Chip Kahn, president and CEO of the Federation of American Hospitals (FAH), said the organization is “taking everybody at their word that one of the Republicans’ top priorities is repealing the ACA. But the circumstances under which it is deconstructed or revised are very critical to us and to the patients and communities we serve.”

Kahn said that people who have had insurance coverage for the first time through the state exchanges or Medicaid expansion may be at risk. 

“We don’t know that there will be a real replacement,” Kahn said in an interview.

While Republicans may seek to repeal Obamacare entirely, Kahn said, they may be unable to do that.

“It takes 60 votes in the Senate and Democrats have 48,” Kahn said. “So this will likely be worked out in some kind of budget reconciliation.”

Mark Taylor is a freelance writer based in Chicago.


Publication Date: Tuesday, November 15, 2016