Course | Intermediate | Healthcare Reform
This course explores trends in the ongoing development of state and federal healthcare policies and covers topics related to the national healthcare debate. It also discusses increased employer and consumer awareness and its impact on healt...
Save
Course | Advanced | Healthcare Reform
This course addresses the broad provisions of the Affordable Care Act, the Centers for Medicare and Medicaid Services proposed alternative delivery and payment models, and standard quality measures.<div><br></div><div>Estimated course compl...
Save
News | Healthcare Reform

For hospitals, Biden's healthcare policies include many unknowns

News | Healthcare Reform

For hospitals, Biden's healthcare policies include many unknowns

  • Uncertainty regarding Joe Biden’s healthcare policies includes what sort of provider rates would be used in a public option.
  • Biden’s proposed expansion of Medicare eligibility would have significant but unknown effects on hospital revenue.
  • Biden’s recent promise to implement more pandemic-related lockdowns could further strain hospital finances.

From what rates would be offered in a public option to the possibility of more government-ordered shutdowns related to the COVID-19 pandemic, many unknowns remain about how the healthcare policy proposals of Democratic presidential candidate Joe Biden may affect hospital finances.

The unknowns of a potential Biden administration have received much less attention than uncertainty over how President Donald Trump would respond if the U.S. Supreme Court strikes down the Affordable Care Act (ACA). But with Biden leading national polls heading into the Election Day, his policies may be more likely to affect hospitals.

One of Biden’s high-profile proposals would create a so-called public-option health plan in all ACA marketplaces as an alternative to those offered by commercial plans. That plan could attract tens of millions of enrollees, according to some estimates.

Although hospital finances would benefit if any uninsured gain such coverage, many enrollees may sign up after dropping their employer-sponsored coverage.

The Biden campaign plan said it would set provider payment rates for the public option using negotiations, “as in Medicare.” But healthcare policy experts note that Medicare sets provider rates and does not negotiate them.

“The examples we have of this are Medicare and Medicaid,” said Devon Herrick, PhD, a policy adviser with The Heartland Institute. “We can safely assume a public option would pay reimbursement rates similar to Medicare.”

Revenue effects of a public option on a model hospital created by the Advisory Board ranged from a 0.3% increase to a 7% decrease, depending on variables regarding the plan’s rates and uptake by the public.

Although not specified on the Biden campaign’s website, Medicare — not private health plans — would administer the public option, according to a consensus report this summer by advisers of Biden and former Democratic campaign rival Sen. Bernie Sanders.

Hospital advocates have opposed creation of a public option over concerns that it would hurt revenue. A government-run, Medicare-like option would reduce hospital payments by nearly $800 billion over 10 years, according to a study by KNG Health Consulting released by the American Hospital Association and Federation of American Hospitals.

Expansion of the Medicare age floor

In campaign speeches, Biden has urged expanding Medicare eligibility, and the Biden-Sanders consensus group urged lowering the eligibility age from 65 to 60.

That step would increase Medicare enrollment by 32% by 2030, according to an analysis by the Wharton Business School at the University of Pennsylvania.

Among  unknown aspects of the proposal is whether the expansion would be through fee-for-service Medicare, Medicare Advantage plans or some combination of both.

But any of those options would result in large numbers of commercially insured hospital patients moving to a health plan that pays providers much lower rates. For instance, a RAND Corporation report found commercial plans paid hospitals 241% of Medicare rates in 2017. Another complication is that the 60- to 64-year-old population has some of the largest hospital spending of any pre-Medicare age group.

Another issue for hospitals would be an expansion of Medicare site-neutral payment policies to a new population.

“I would expect some of the current policies on site-neutral payments to remain in place” under a Biden administration, Herrick said. “Hospitals would likely receive much lower reimbursements from expanded Medicare and [a] public option compared to private insurers’ payments.”

New funding for ACA marketplace coverage

Another of Biden’s proposed changes to the ACA marketplaces would eliminate the 400% income cap on tax credit eligibility and lower the limit on the cost of coverage from 9.86% of income to 8.5%.

Questions remain over the cost of the expanded ACA subsidies since the Biden campaign has not provided estimates.

The Urban Institute issued projections for several health insurance coverage proposals, one of which was described by healthcare policy advisers as similar to Biden’s proposed individual-market coverage expansions. That plan would cover 25.6 million people who are otherwise uninsured, although not 6.6 million undocumented immigrants. It would cost $122.1 billion in 2020 and $1.5 trillion over 10 years.

But if Biden wins and has only a narrow majority in the Senate, the ability to provide large ACA marketplace funding increases could be limited, healthcare analysts said.

“While a Biden healthcare agenda may seek to lower the age for Medicare eligibility or establish a public option, the reality is that what happens in the Senate has significant implications,” said Brenda Pawlak, managing director with Manatt Health.

Questions about proposed COVID-19 response

Also unclear is whether the Biden administration would push to reinstitute broad stay-at-home orders and bans on elective procedures. Biden muddied the waters by endorsing further lockdowns during the second presidential debate, but he has since walked that back with promises that “I’m not going to shut down the country.”

Such orders come from governors and other state officials, but in the spring, many used CMS-issued guidance to justify their bans on elective procedures, with some bans reinstated sporadically in the summer and fall as local spikes occurred.

Hospitals are pushing back against further mandatory bans because of the effects on both patient care and revenue.

Pawlak said, “While some patients have resumed interactions with the healthcare system, we understand there are many who are still not receiving care and in need of both chronic care management and more acute interventions. This delay of care will be exacerbated by future shutdowns combined with the potential for some providers to fold. This is a major issue, and a lot remains to be seen how either administration will address these lingering concerns.”

About the Author

Rich Daly, HFMA Senior Writer and Editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Advertisements

Related Articles | Healthcare Reform

Blog | Healthcare Reform

Post-election Washington policy outlook on health policy priorities

HFMA's Chad Mulvany speculates on health policy priorities and changes in the next 24 months, assuming we continue to have a divided government and President-elect Biden's campaign survives President Trump's many legal challenges about state vote counts.

News | Coronavirus

Democratic advisers expect new (and some continued) healthcare policies under Biden

A Biden administration is likely to try new healthcare policy approaches and to build on some from the Trump administration, say Democratic advisers.

Blog | Healthcare Reform

California v. Texas: What’s next?

HFMA's Chad Mulvany says we won’t know the outcome of the case until sometime in the first half of next year.

Blog | Coronavirus

COVID-19 exacerbates bankruptcy for at-risk hospitals

HFMA's Chad Mulvany says there will be a greater number of hospital bankruptcies the longer Congress and the administration dither on additional relief to providers and if more providers have to reduce the volume of non-emergent services due to spiking COVID-19 cases.