One of the key roles of a healthcare leader is to strategically plan for the future, which requires a deep knowledge of the healthcare environment and legislative landscape impacting healthcare organizations. Between state action and federal regulation, it can be difficult to keep up. Here, Stephanie Kennan, senior vice president of federal public affairs for McGuireWoods Consulting, and former health policy advisor to Sen. Ron Wyden (D-Ore.), outlines several federal legislative issues with a potentially large impact on hospitals and health systems.
Implementation of healthcare reform
While only the Supreme Court can decide the ultimate fate of the Patient Protection and Affordable Care Act, a number of the law's provisions are in various stages of implementation, says Ms. Kennan. If the mandate or the entire law is repealed, it will create a headache for entangling the parts which have already been set into motion. "The theory behind the bill relies on the individual mandate because that's how the whole thing works," she says. That is, if all individuals, especially healthy ones, aren't required to obtain insurance, other key elements, such as requiring coverage for pre-existing conditions, would be nearly impossible to maintain, in financial terms. If Republicans take control of Congress or the White House, the future of healthcare reform becomes even more shaky, as significant parts of the law could be repealed or not funded, says Ms. Kennan.
If reform is upheld, the transition toward value-based care will be even more imminent. The impact on hospitals could be positive for those with high quality, low cost care. "In theory, the more people covered, the less bad debt. And, people will hopefully access care before needing to go to the hospital," says Ms. Kennan.
Supercommittee recommendations
The Joint Select Committee on Deficit Reduction, better known as the "supercommittee," has been tasked with identifying $1.2 trillion in federal spending cuts before Thanksgiving. If they agree on a package, Congress has until Dec. 23 to approve it, or $1.2 trillion in automatic spending cuts will take place. If sequestration does take place, Medicare spending would be slashed by 2 percent. "For some sectors, automatic cuts could be more favorable than cuts made [by the supercommittee]," says Ms. Kennan. While numerous healthcare organizations and associations have been lobbying committee members to protect their interests, cuts of at least some sort are imminent, which will directly impact hospitals' bottom lines.
However, the cuts don't mark the end of the concerns for healthcare providers. "Even after we get through [supercommittee or automatic cuts], there will be a continued interest [by legislators] in looking to Medicare for spending cuts," she says. For example, both the president's and the Congressional Budget Office's federal deficit reduction recommendations include cuts to graduate medical educations funds, says Ms. Kennan. Additionally, critical access hospitals' cost-based reimbursement is also on the chopping block. "Just about [every debt reduction proposal] included changes for rural hospitals," she said.
Continued scrutiny on Medicare, Medicaid spending
Regardless of which specific cuts are made to meet the debt-ceiling agreement, hospitals should prepare for further reimbursement risk from federal programs. This can be a difficult pill to swallow for hospitals, which already agreed to $155 billion in cuts over 10 years as part of the PPACA. But, reducing federal spending by $1.2 trillion still leaves a lot to cut if legislators' goal is to close the deficit, which has now reached roughly $14 trillion.
Ms. Kennan says two areas ripe for cuts include: rebasing Medicaid Disproportionate Share Hospital payments, which provide payments to hospitals that treat a large number of low-income patients; and resetting coding adjustments for possible overpayments due to improved coding of Medicare Severity-Diagnosis Related Groups. Hospitals can also expect increased regulatory scrutiny over improper payments and relationships with physicians.
On a state level, a growing number of states are seeking to combat growing Medicaid costs and shirking budgets by cutting Medicaid costs, either through proposed provider cuts, limits to physician and emergency room visits and hospital stays or through transitions to bundled or managed care models. These coordinated delivery models are also expected to increase on the federal level as the Center for Medicare and Medicaid Innovation encourages the testing and new delivery models. Under these arrangements, Ms. Kennan cautions, success could have a lot to do with who controls the bundled payment. "Who controls that bundle is incredibly important," she says. "The post-acute care provider doesn't necessarily want the hospital to control the money, and the hospital doesn't necessarily want to post-acute provider to control it."
Non-profit hospitals face additional scrutiny over their tax-exempt status. Healthcare reform called for the reporting and collection of additional data on hospital charity care, which will be considered by Congress. While it's uncertain at this point where this sort of review could lead, legislatively, non-profit hospitals should prepare for some heat if their levels of charity care are low. Mr. Kennan says, however, this can be prevented. "A lot of the issues related to charity care are looked at by tax staff, not healthcare staff, and [they speak in] different languages," she says. "Hospitals have to continually reach out to their legislators and educate them on what they do and why it's important to the community."
Establishing relationships with legislators is important for all hospitals, not just non-profit ones, says Ms. Kennan. She encourages hospitals and health systems to meet in-person with their legislators to advocate for their interests, and in today's political environment, nothing works better than a "jobs" message. That is, hospitals should explain how their funding directly creates jobs in their communities and how cuts to funding could put jobs at risk. "Hospitals are usually the largest employer in a Congressional District, so it's important to have a jobs message with your member in addition to making it clear what an investment in the hospital creates for the community," she says.
Supercommittee Expected to Maintain Healthcare Reform Funding
Implementation of healthcare reform
While only the Supreme Court can decide the ultimate fate of the Patient Protection and Affordable Care Act, a number of the law's provisions are in various stages of implementation, says Ms. Kennan. If the mandate or the entire law is repealed, it will create a headache for entangling the parts which have already been set into motion. "The theory behind the bill relies on the individual mandate because that's how the whole thing works," she says. That is, if all individuals, especially healthy ones, aren't required to obtain insurance, other key elements, such as requiring coverage for pre-existing conditions, would be nearly impossible to maintain, in financial terms. If Republicans take control of Congress or the White House, the future of healthcare reform becomes even more shaky, as significant parts of the law could be repealed or not funded, says Ms. Kennan.
If reform is upheld, the transition toward value-based care will be even more imminent. The impact on hospitals could be positive for those with high quality, low cost care. "In theory, the more people covered, the less bad debt. And, people will hopefully access care before needing to go to the hospital," says Ms. Kennan.
Supercommittee recommendations
The Joint Select Committee on Deficit Reduction, better known as the "supercommittee," has been tasked with identifying $1.2 trillion in federal spending cuts before Thanksgiving. If they agree on a package, Congress has until Dec. 23 to approve it, or $1.2 trillion in automatic spending cuts will take place. If sequestration does take place, Medicare spending would be slashed by 2 percent. "For some sectors, automatic cuts could be more favorable than cuts made [by the supercommittee]," says Ms. Kennan. While numerous healthcare organizations and associations have been lobbying committee members to protect their interests, cuts of at least some sort are imminent, which will directly impact hospitals' bottom lines.
However, the cuts don't mark the end of the concerns for healthcare providers. "Even after we get through [supercommittee or automatic cuts], there will be a continued interest [by legislators] in looking to Medicare for spending cuts," she says. For example, both the president's and the Congressional Budget Office's federal deficit reduction recommendations include cuts to graduate medical educations funds, says Ms. Kennan. Additionally, critical access hospitals' cost-based reimbursement is also on the chopping block. "Just about [every debt reduction proposal] included changes for rural hospitals," she said.
Continued scrutiny on Medicare, Medicaid spending
Regardless of which specific cuts are made to meet the debt-ceiling agreement, hospitals should prepare for further reimbursement risk from federal programs. This can be a difficult pill to swallow for hospitals, which already agreed to $155 billion in cuts over 10 years as part of the PPACA. But, reducing federal spending by $1.2 trillion still leaves a lot to cut if legislators' goal is to close the deficit, which has now reached roughly $14 trillion.
Ms. Kennan says two areas ripe for cuts include: rebasing Medicaid Disproportionate Share Hospital payments, which provide payments to hospitals that treat a large number of low-income patients; and resetting coding adjustments for possible overpayments due to improved coding of Medicare Severity-Diagnosis Related Groups. Hospitals can also expect increased regulatory scrutiny over improper payments and relationships with physicians.
On a state level, a growing number of states are seeking to combat growing Medicaid costs and shirking budgets by cutting Medicaid costs, either through proposed provider cuts, limits to physician and emergency room visits and hospital stays or through transitions to bundled or managed care models. These coordinated delivery models are also expected to increase on the federal level as the Center for Medicare and Medicaid Innovation encourages the testing and new delivery models. Under these arrangements, Ms. Kennan cautions, success could have a lot to do with who controls the bundled payment. "Who controls that bundle is incredibly important," she says. "The post-acute care provider doesn't necessarily want the hospital to control the money, and the hospital doesn't necessarily want to post-acute provider to control it."
Non-profit hospitals face additional scrutiny over their tax-exempt status. Healthcare reform called for the reporting and collection of additional data on hospital charity care, which will be considered by Congress. While it's uncertain at this point where this sort of review could lead, legislatively, non-profit hospitals should prepare for some heat if their levels of charity care are low. Mr. Kennan says, however, this can be prevented. "A lot of the issues related to charity care are looked at by tax staff, not healthcare staff, and [they speak in] different languages," she says. "Hospitals have to continually reach out to their legislators and educate them on what they do and why it's important to the community."
Establishing relationships with legislators is important for all hospitals, not just non-profit ones, says Ms. Kennan. She encourages hospitals and health systems to meet in-person with their legislators to advocate for their interests, and in today's political environment, nothing works better than a "jobs" message. That is, hospitals should explain how their funding directly creates jobs in their communities and how cuts to funding could put jobs at risk. "Hospitals are usually the largest employer in a Congressional District, so it's important to have a jobs message with your member in addition to making it clear what an investment in the hospital creates for the community," she says.
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