The economic future for healthcare providers under President Donald Trump's administration remains uncertain. But that doesn't mean hospital and health system leaders aren't taking action to ensure their organizations remain financially solvent no matter what legislation comes down the pipeline.
"The cost of care as well as who should pay for it will remain central issues in healthcare in the next year," said Jonathan Wiik, MBA, principal of TransUnion Healthcare, during a webinar March 28.
Although immediate major changes to existing healthcare legislation are unlikely following the White House's decision to pull the AHCA, Mr. Wiik expects GOP lawmakers to pursue healthcare budget reconciliation in the next year. This includes material changes to how the government funds certain healthcare services, such as Medicare, Medicaid and the individual mandate.
By understanding how proposed policy changes could affect healthcare providers' payer mix, hospital leaders can take action and implement financial strategies that protect their cash flow.
Understanding how legislation affects payer mix
CMS and GOP lawmakers have proposed changes to the ACA's individual insurance markets aimed at stabilizing the exchanges. These include tweaking enrollment periods, lowering standards of covered services and requiring documentation for Americans to qualify for subsidies. Pending approval, these amendments could make the process to buy insurance considerably more difficult for consumers compared to previous years in addition to raising out-of-pocket costs for policyholders, according to Mr. Wiik.
Lawmakers have also made clear restructuring federal Medicaid funding is a top priority. Changes in funding levels could further disrupt the healthcare market by changing who qualifies for government-sponsored insurance and what those benefits include.
Mr. Wiik discussed four key policy changes that could impact uninsured rates and negatively affect providers financially by increasing levels of uncompensated care.
- Shorter enrollment period. CMS proposed reducing the exchanges' 2018 open enrollment period — during which people without government- or employer-sponsored health insurance can sign up for coverage — from the typical 3 months to just 1.5 months. Tightening the enrollment window could lower the amount of people who purchase insurance through the exchanges for the first time.
- Increased scrutiny during special enrollment periods. The rule would force people who enroll outside of the open enrollment period to provide additional documentation to qualify for access to coverage. Consumers who use this option include people who lose employer coverage due to a change in job status, get married, have a baby or adopt a child. This could also make health insurance less accessible, Mr. Wiik said.
- Lower standards of coverage. The proposed rule would lower the minimum coverage standards insurance plans must meet to be sold on government exchanges. In other words, it would allow insurers to cover fewer health services and still meet the criteria to be sold as a bronze, silver or gold plan.
- Changes to Medicaid funding. GOP policymakers and CMS have proposed several alternative ways to restructure Medicaid funding, including per capita and block grant funding. Under a per capita funding model, states would receive a fixed amount of federal funds per Medicaid enrollee. A federal block grant program would give states a fixed amount of funds annually for their entire Medicaid program, regardless of enrollment levels.
Policymakers generally agree either funding model would reduce federal Medicaid funding and put cost pressures on state Medicaid programs, causing some states to either limit enrollment, reduce benefits or further slash provider reimbursement rates. Coverage disruption to the Medicaid markets most likely means hospitals would see increased uncompensated care and rising bad debt.
Best practices for financial success
The first thing hospitals should do to prepare for ACA disruption is to insulate their bottom line against economic and regulatory uncertainty. Defensive policies like conserving capital and reevaluating planned expenses are effective ways to bolster cash reserves. For additional protection, some providers are asking health plans to commit to locked-in reimbursement rates in multiyear contracts.
Providers can also take offensive action to make sure their team is well prepared to handle changes in their patients' health coverage. By making effective self-pay collection practices a core revenue cycle strength, hospitals can manage increasing levels of self-pay, uninsured and charity care patients. Mr. Wiik recommended healthcare providers consider the following best practices to ensure their organization's financial workflow remains strong.
- Optimize patient financial clearance, billing and collections. The more skilled providers are at dealing with patients who have increased financial responsibility for care, the more effective they are at helping patients who have experienced changes in coverage find ways to pay for the services they need, Mr. Wiik said.
- Deploy analytics. Hospitals are using analytics tools for more than predictive insights. They can also use analytics to identify patient payment ability and propensity to pay, including the amount a patient's insurance company is willing to pay and projected out-of-pocket costs. Giving this information to patients upfront enables employees and patients to find workable payment agreements prior to care, Mr. Wiik said.
- Enhance financial counseling. Patients who undergo rapid or unexpected changes in their coverage status may feel confused and upset. Providers can address these issues by offering financial and benefit counseling services whenever possible. Analytics tools identifying patients with the greatest financial needs can help providers proactively assign financial counselors to these individuals' cases. Staff then can concentrate their efforts on the right patients, for the right reasons, at the right time, Mr. Wiik says.
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To view a recording of the webinar, click here.