The daily back-and-forth on healthcare reform in Congress may have hospital leaders reeling — but they can focus on several points amid the legislative whirl, according to Russ Sullivan, partner at McGuireWoods.
Mr. Sullivan is a former staff director of the Senate Finance Committee. He served during the ACA implementation and was a principal drafter of the law's Cadillac tax. Mr. Sullivan flagged the followingfive things as top priority for hospitals to watch throughout the ACA reform process.
1. Reinstatement of uncompensated care payments. Republicans are looking to roll back Medicaid expansion and repeal disproportionate share hospital payment cuts made under the ACA — a sign lawmakers are listening to providers on the Hill, according to Mr. Sullivan.
The ACA reduced DSH payments under the assumption Medicaid expansion and other reforms would provide coverage for 30 million previously uninsured patients. However, the U.S. Supreme Court's 2012 decision to make Medicaid expansion optional for states meant only about 21 million people gained coverage. DSH cuts remained at levels set under the 30 million estimate, meaning hospitals bore the brunt of this decision from a financial perspective.
"Fortunately for hospitals, it seems like House representatives are willing to view uncompensated care payments as similar to an industry tax," Mr. Sullivan told Becker's. This means along with other taxes under the ACA, such as the medical device tax and the health insurance tax, DSH cuts may be repealed. "Now at what level [DSH payments are restored] and whether that survives the legislative process is what hospitals need to be concerned about," Mr. Sullivan said.
2. Proliferation of Medicaid reimbursement arrangements. "First of all, I am not sure whether Republicans have made a good decision on inserting Medicaid reform into this first ACA reconciliation bill," Mr. Sullivan said. "I think they are going to find it difficult to find consensus with governors if they go there."
However, if they do tackle Medicaid reform, either through a per capita cap or block grant format, state Medicaid programs will become less standardized. "Some states have already started to do this through the waiver program under the Obama administration," Mr. Sullivan said, "But instead of six states, maybe 40 states will be doing it."
What this means for hospitals and health systems — particularly those with operations in multiple states — is they will have to be ready to deal with multiple types of Medicaid reimbursement, according to Mr. Sullivan.
"My view — if I were advising the Republicans — is I would have the states that did not expand Medicaid under the law go in right now and seek a [Medicaid] waiver, and the administration should grant those waivers — as many as they feel they have the authority to under current law," Mr. Sullivan said. If states use the waiver process before legislation moves, they can change their programs through a regulatory process, which is much more nimble in terms of time and money than a legislative process, according to Mr. Sullivan.
3. Destandardization of health insurance products. "While this is not going to happen immediately, hospitals need to plan for this eventually," Mr. Sullivan said.
To attract younger and healthier enrollees, Republicans want payers to have more flexibility to pare down health plans and offer more bare-bones policies. To do this, they will likely seek to eliminate essential health benefit requirements, according to Mr. Sullivan. However, full elimination of these requirements is still far off. Currently, Republicans plan to execute their first round of ACA repeals through the reconciliation process because it is quicker and only requires a simple majority vote. Essential health benefit requirements are immune to the reconciliation process because their principal impact is not budgetary.
"Keep in mind, they can partially do this [reduce essential health benefit requirements] through the regulatory method. The Trump administration can skinny down those essential benefit requirements," Mr. Sullivan said, similarly to how the Obama administration expanded them. Payers could also sidestep essential benefit requirements by creating a whole new category of health insurance products such as associated health plans, according to Mr. Sullivan.
"Eventually hospitals should be preparing for the possibility that we could have hospitalization-only products," Mr. Sullivan said. "Consumers may opt for something that is truly catastrophic."
4. Explosion of HSAs as a financing tool. The expansion of health savings accounts is the most sure-to-happen provision of ACA reform, according to Mr. Sullivan. In fact, he expects them to double in size over the next decade based on recent proposals. Republicans want to increase the amount people can put in their HSAs with the idea that those funds can be used to pay health insurance deductibles and copayments. For hospitals looking ahead, it will be important to figure out how HSAs fit into their revenue collection strategy if patients use them to pay hospital costs. Questions Mr. Sullivan suggests hospitals consider in regard to HSAs include: How long does it take for people to make payments from HSAs? Do you wait until after the insurance company pays? What is the safest way to ensure collection?
5. Unexpected regulations. "The narrow GOP majority in the Senate dictates that they are going to have a hard time reaching agreement on a lot of healthcare policy," Mr. Sullivan said. "Therefore there will be pressure on the Trump administration to do what they can through the regulatory process." This could mean more states will file for Medicaid waivers or the definition of essential health benefits will change, as previously mentioned.
Considering the differing views on healthcare issues among Republicans especially, Mr. Sullivan advises hospitals to continue to engage in the regulatory process as they normally would, rather than sit back during this time of uncertainty until things in Congress sort out. "Hospitals should watch closely with how the Trump administration may try to change policy through regulation," he said.
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