By Alex Kacik | July
5, 2017
California has been approaching universal healthcare coverage in
large part thanks to the expansion of the Medicare and Medi-Cal programs under
the Affordable Care Act.
Only 3.5% of California's population is uninsured and one out of every two children are covered by Medicaid, according to Marin General Hospital CEO Lee Domanico.
But that could all change under the Senate's bill to replace the Affordable Care Act, Domanico said.
"If that were to reverse itself it would really be devastating for those people and tough for us because that reimbursement could go to zero," he said. "Bad debts would go up, which had gone down through the Obamacare plan with more people insured through the exchanges and expansion of the Medi-Cal program."
If the Senate bill becomes law, providers could be faced with ballooning uncompensated care that forces service cutbacks, potential staffing reductions or hospital closures, health experts said.
The now-delayed bill, coined the Better Care Reconciliation Act, would slash the ACA's financial assistance to families and individuals who couldn't otherwise afford healthcare, cap Medicaid spending and roll back the Medicaid expansion afforded to states' most vulnerable populations. Those changes could cause 22 million Americans to lose coverage and send insurance premiums surging.
As patients lose access, more will turn to high-cost emergency rooms for care, increasing uncompensated care and squeezing providers' margins.
In other words, providers would be forced to regress.
"If Medicaid gets rolled back, there is no question there is going to be more uncompensated care," Cleveland Clinic outgoing CEO Dr. Toby Cosgrove said. "When up to 22 million people lose coverage, that becomes a substantial risk, particularly for safety net and rural hospitals that are already losing money on patient care. But the implications go beyond patients and hospitals, they go to the communities, especially when their biggest employers are hospitals."
The proposed Senate bill would leave states to fill the funding gap or end coverage as the enhanced federal payments for Medicaid expansion would be phased out over three years, starting in 2021.
It would also cap the growth of federal Medicaid payments at the medical inflation rate, which is estimated to be 5.6% annually, beginning in 2020. Come 2025, the growth of those payments would be limited to the Consumer Price Index rate, which has averaged around 1.4% since the Great Recession.
The Congressional Budget Office found that Medicaid spending would be 26% lower in 2026 than it would be compared to current spending trends, and the gap would widen to about 35% in 2036.
The bill permits states to opt out of the ACA's mandated essential benefits, which would allow insurers to turn away patients who need maternity care, mental health treatment, chemotherapy and emergency care, among others.
"We will go back to the days where the uninsured showed up to ER," said Michael Rogers of the Catholic Health Association. "Catholic hospitals would be in a tough position because of our commitment to the poor and vulnerable."
The Urban Institute, A Washington D.C. think tank, estimated that state Medicaid spending would increase by an average of $565 million in 2022 under the proposed legislation as federal funding for Medicaid would dip by $102.2 billion. Most states would not fill the funding gap and many of the poor and indigent would be without coverage, health experts said.
As uncompensated care rises, operating margins would shrink, especially among hospitals in expansion states. Hospitals in D.C. and the 31 states that expanded Medicaid are projected to see a 78% increase in uncompensated care from 2017 to 2026, analysis from the Commonwealth Fund found. Eleven of those states would see costs at least double, including Kentucky and West Virginia, which would have 165% and 122% increases, respectively. Providers would also face negative credit ratings if the bill becomes law, Moody's Investment Services and Fitch ratings said.
Providers could face trouble with rising uncompensated care, dwindling reimbursements and increasing bad debts stemming to high-deductible plans, said Dr. Lisa Bielamowicz, senior vice president and chief medical officer of the Advisory Board.
"Medicaid cuts over time require huge adaptations of providers' business models," she said. "Some independent physicians who have a significant amount of Medicaid patients would have to close their practices and that burden will fall on health systems."
Even though the proposed bill will bolster Medicaid disproportionate share hospital payments (DSH), that will not offset the Medicaid cuts, researchers said. Hospitals in Medicaid expansion states could experience an average 14% decline in Medicaid revenues from 2017 to 2016, the Commonwealth Fund estimated.
"The proposed Senate bill expands DSH payments but I am not sure that will offset the reduction in insurance coverage," said Patrick Redmon of the Berkeley Research Group. "It's hard to think about care coordination and improving population health when you don't see people on a consistent basis, can't manage care and only see people when they are absolutely sick."
The bill could also bring some unintended consequences as providers and physicians adapt and invest in infrastructure that supports new payment models. The majority of medical practice leaders are still not ready to comply with the Medicare Access and CHIP Reauthorization Act, and sweeping changes in healthcare policy may further slow that process, said Rebecca Altman of the Berkeley Research Group.
"I wonder if there isn't a tertiary effect on MACRA adoption when all of sudden the volume of patients isn't there to make the return on managed care teams efficient," she said.
For now, providers will have to wait. Amid mounting dissent, Senate Majority Leader Mitch McConnell delayed a vote on the ACA replacement bill until after the holiday recess.
"I haven't talked to any provider that supports the Senate bill," Cosgrove of Cleveland Clinic said. "The ACA has never been more popular."
Only 3.5% of California's population is uninsured and one out of every two children are covered by Medicaid, according to Marin General Hospital CEO Lee Domanico.
But that could all change under the Senate's bill to replace the Affordable Care Act, Domanico said.
"If that were to reverse itself it would really be devastating for those people and tough for us because that reimbursement could go to zero," he said. "Bad debts would go up, which had gone down through the Obamacare plan with more people insured through the exchanges and expansion of the Medi-Cal program."
If the Senate bill becomes law, providers could be faced with ballooning uncompensated care that forces service cutbacks, potential staffing reductions or hospital closures, health experts said.
The now-delayed bill, coined the Better Care Reconciliation Act, would slash the ACA's financial assistance to families and individuals who couldn't otherwise afford healthcare, cap Medicaid spending and roll back the Medicaid expansion afforded to states' most vulnerable populations. Those changes could cause 22 million Americans to lose coverage and send insurance premiums surging.
As patients lose access, more will turn to high-cost emergency rooms for care, increasing uncompensated care and squeezing providers' margins.
In other words, providers would be forced to regress.
"If Medicaid gets rolled back, there is no question there is going to be more uncompensated care," Cleveland Clinic outgoing CEO Dr. Toby Cosgrove said. "When up to 22 million people lose coverage, that becomes a substantial risk, particularly for safety net and rural hospitals that are already losing money on patient care. But the implications go beyond patients and hospitals, they go to the communities, especially when their biggest employers are hospitals."
The proposed Senate bill would leave states to fill the funding gap or end coverage as the enhanced federal payments for Medicaid expansion would be phased out over three years, starting in 2021.
It would also cap the growth of federal Medicaid payments at the medical inflation rate, which is estimated to be 5.6% annually, beginning in 2020. Come 2025, the growth of those payments would be limited to the Consumer Price Index rate, which has averaged around 1.4% since the Great Recession.
The Congressional Budget Office found that Medicaid spending would be 26% lower in 2026 than it would be compared to current spending trends, and the gap would widen to about 35% in 2036.
The bill permits states to opt out of the ACA's mandated essential benefits, which would allow insurers to turn away patients who need maternity care, mental health treatment, chemotherapy and emergency care, among others.
"We will go back to the days where the uninsured showed up to ER," said Michael Rogers of the Catholic Health Association. "Catholic hospitals would be in a tough position because of our commitment to the poor and vulnerable."
The Urban Institute, A Washington D.C. think tank, estimated that state Medicaid spending would increase by an average of $565 million in 2022 under the proposed legislation as federal funding for Medicaid would dip by $102.2 billion. Most states would not fill the funding gap and many of the poor and indigent would be without coverage, health experts said.
As uncompensated care rises, operating margins would shrink, especially among hospitals in expansion states. Hospitals in D.C. and the 31 states that expanded Medicaid are projected to see a 78% increase in uncompensated care from 2017 to 2026, analysis from the Commonwealth Fund found. Eleven of those states would see costs at least double, including Kentucky and West Virginia, which would have 165% and 122% increases, respectively. Providers would also face negative credit ratings if the bill becomes law, Moody's Investment Services and Fitch ratings said.
Providers could face trouble with rising uncompensated care, dwindling reimbursements and increasing bad debts stemming to high-deductible plans, said Dr. Lisa Bielamowicz, senior vice president and chief medical officer of the Advisory Board.
"Medicaid cuts over time require huge adaptations of providers' business models," she said. "Some independent physicians who have a significant amount of Medicaid patients would have to close their practices and that burden will fall on health systems."
Even though the proposed bill will bolster Medicaid disproportionate share hospital payments (DSH), that will not offset the Medicaid cuts, researchers said. Hospitals in Medicaid expansion states could experience an average 14% decline in Medicaid revenues from 2017 to 2016, the Commonwealth Fund estimated.
"The proposed Senate bill expands DSH payments but I am not sure that will offset the reduction in insurance coverage," said Patrick Redmon of the Berkeley Research Group. "It's hard to think about care coordination and improving population health when you don't see people on a consistent basis, can't manage care and only see people when they are absolutely sick."
The bill could also bring some unintended consequences as providers and physicians adapt and invest in infrastructure that supports new payment models. The majority of medical practice leaders are still not ready to comply with the Medicare Access and CHIP Reauthorization Act, and sweeping changes in healthcare policy may further slow that process, said Rebecca Altman of the Berkeley Research Group.
"I wonder if there isn't a tertiary effect on MACRA adoption when all of sudden the volume of patients isn't there to make the return on managed care teams efficient," she said.
For now, providers will have to wait. Amid mounting dissent, Senate Majority Leader Mitch McConnell delayed a vote on the ACA replacement bill until after the holiday recess.
"I haven't talked to any provider that supports the Senate bill," Cosgrove of Cleveland Clinic said. "The ACA has never been more popular."
Alex Kacik is the hospital operations reporter
for Modern Healthcare in Chicago. Aside from hospital operations, he covers
supply chain, legal and finance. Before joining Modern Healthcare in 2017,
Kacik covered various business beats for seven years in the Santa Barbara,
California region. He received a bachelor's degree in journalism from Cal Poly
San Luis Obispo in Central California.
