While every new year brings change, with Donald Trump elected to become the next president and the U.S. House and Senate both having Republican majorities, managed healthcare executives will see more changes than usual in 2017—beginning with repealing and replacing most of the provisions in the Affordable Care Act (ACA). Experts in the industry state their cases for what they expect will occur over the coming months regarding the ACA, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS, Medicare, Medicaid, and more.
Trump made repealing and replacing the ACA a core position of his presidential campaign. “Although Trump will help to drive the approach and agenda for such an effort, congressional Republicans will bear most of the burden for fulfilling this promise,” says S. Lawrence Kocot, MPA, JD, LLM, national leader, Center for Healthcare Regulatory Insight, KPMG, LLP.
“Attempting to repeal the law as a whole through regular order is highly unlikely given the probability of a likely Democratic filibuster. The more likely path would be to repeal portions of the law through a reconciliation bill (similar to H.R. 3762, an approach that passed the House and Senate before being vetoed by President Obama in 2015). This reconciliation would likely target some major provisions such as the individual and employer mandate, insurance subsidies, and Medicaid expansion funding, while preserving some that enjoy bipartisan consensus, such as guaranteed issue and insuring children up to age 26 on their parents’ policies—which Trump said he may support after he was elected.” Congress would then likely craft a replacement bill that could contain new approaches to cover millions of Americans that might lose coverage through a repeal effort.
But the timing of repeal and replacement is uncertain; the repeal process could occur as early as Trump’s inauguration day of January 20, but the crafting of a replacement could take significantly longer as a growing number of congressional Republicans seem to agree that bipartisan support may be necessary for this to be sustainable, Kocot continues.
Finally, the new administration could starve health insurance exchange funding and alter other regulatory provisions of the ACA through regulatory and sub-regulatory processes, or through non-enforcement, Kocot notes.
Joel White, president of the Council for Affordable Health Coverage, also expects Trump to make repealing and replacing the ACA a top priority. “The market faces significant challenges, including rising costs and premiums, less competition, and weak enrollment,” he says. “Both Republicans and Democrats want to improve the market, but differ significantly on how to do so.
“What cannot be repealed or blocked through regulations, Congress will repeal and replace,” White says, adding that he believes the replacement will focus on affordability, then access, and then coverage and will include some of the provisions already in law.
Sally C. Pipes, president and CEO, Pacific Research Institute, points out that Speaker of the U.S. House of Representatives Paul Ryan—along with House Republications—has already put forward a replacement plan, “A Better Way,” which would repeal many of Obamacare’s mandates and regulations. However, it is not in legislative form yet nor are the costs worked out.
The GOP plan also provides $25 billion in funding over 10 years to state-level “high-risk” pools. “These pools would provide subsidized coverage for individuals with extremely expensive chronic conditions to manage,” Pipes says. “That leaves the standard insurance pool with patients who have common, actuarially predictable health risks. Insurers would be able to predict with much greater accuracy how much it would cost to pay for these individuals’ care—and could therefore offer lower, more stable premiums.”
White predicts that Congress will use the budget reconciliation process to both reform healthcare and control healthcare costs, which he projects to be the single largest category of federal program spending over the next 10 years. “This package will include many changes to physician and hospital payments designed to further efficiency, quality, and safety,” he says. “While MACRA—the law that replaced the failed Medicare Sustainable Growth Rate (SGR) law (which required double digit payment cuts unless Congress overrode them) will continue to move payments from volume based to value based, I do expect some tweaks to be made by the incoming administration regarding how the program is implemented. For example, Trump’s administration could change how Advanced [Alternative Payment Models] APMs are approved, including greater flexibility on how models are vetted and adopted and ultimately paid for.”
Some APMs have been developed such as medical homes and accountable care organizations (ACOs), while some have not yet been fleshed out. MACRA relies on the Center for Medicare & Medicaid Innovation (CMMI) to validate the models in ACOs. “If Congress repeals Obamacare and CMMI along with it, MACRA will likely need to be amended to ensure promising new care delivery and payment systems that introduce good incentives into Medicare to drive costs lower while paying for better outcomes,” White says.
On the topic of CMMI, Pipes says, “Republican members of Congress have previously criticized CMMI’s role in payment reforms and may push for congressional approval on new payment models going forward.” While not popular with doctors, she does not expect MACRA to change much because of its bipartisan support.
Weighing in, Kocot says, “Although the new administration may seek to alter the development and financing of new APMs through MACRA or adjust timelines for clinicians to prepare, the new administration is unlikely to try and repeal MACRA or slow the move away from fee-for-service given MACRA’s bipartisan support. Physicians and other providers reimbursed through Medicare Part B should anticipate continued focus on payments based on the quality and efficiency of care that they provide.”
François de Brantes, executive director, Health Care Incentives Improvement Institute, expects that over time, more providers will participate in advanced APMs than the number of providers who will participate in the Merit-Based Incentive Program (an alternative option physicians can choose to participate in under MACRA. “The Merit-based Incentive Payment System [MIPS) is painful for most physicians because the majority will see stagnating fee schedules way into the future. A few will see increases and some will see decreases, but they will have to wait until months after the end of a performance year to discover their fate. Many will opt for APMs as a result,” he says. “However, the MACRA rule doesn’t give a lot of options, and I think we will see a lot more APM proposals coming from physician groups in 2017. It has yet to be seen whether the new administration is willing to experiment and accept a lot of APM options.”
With growing discontent about the continued growth of the quality-industrial complex as evidenced by the 2,398 page MACRA final rule, Susan Nedza, MD, MBA, senior vice president of clinical outcomes, MPA Healthcare Solutions, says some providers have done the math and are considering simply accepting the negative payment adjustment as the cost of compliance increases and the likelihood of success decreases. “Thus, MIPS provisions regarding the reporting of quality data that are linked to Medicare Part B physician fees may continue to be delayed or watered down,” she says. “But it is unlikely that the MACRA provisions that support participation in APMs will be impacted as they enable shifting of financial risk onto providers.”
Ethan Rii, a shareholder at Vedder Price, who focuses his practice on healthcare transactions and regulatory matters, points out that there is still time to prepare for MACRA, as its full effects won’t hit until 2019. “But understanding how best to position physician practices and their reimbursement strategies can make a significant impact on future growth,” he says. “For example, we may see greater consolidation among medical practices in 2017 given the need to have the proper infrastructure to best demonstrate quality care and recoup the payment benefits of MACRA.”
CMS payment changes
Given the uniform desire to create transparency in reimbursement and continue the focus on quality and outcomes, CMS is likely to continue its focus on these two fronts regardless of a new administration and GOP-controlled Congress, Rii maintains. “Reimbursement pressures will not go away—we could see more demonstration projects, expansion of bundled payment initiatives, and value-based reimbursement structures,” he says.
Rii also believes that Medicare may experience a big transition. “Medicare is the closest thing the United States has to a single-payer system, and a vast number of healthcare providers are dependent on Medicare reimbursement,” he says. “In that regard, there may be a greater push toward narrow networks and managed care initiatives. We may also see greater reform overall for the payment of skilled nursing and post-acute care services. Home health is a booming area; that industry is ripe for reimbursement policy changes.”
Furthermore, Rii expects changes in provider compensation structures. “Today, most physician employment contracts are either fixed salary or productivity based, applying the concepts of work relative value units (wRVUs) and other traditional productivity calculation methodologies,” he says. “Quality remains a limited part of the overall compensation package, but with greater change to overall reimbursement, I think physician contracts will follow that trend, moving away from traditional arrangements and becoming more dependent on quality and other incentive metrics.”
On a related front, de Brantes believes that Medicare Part B changes and other potential changes to physician and hospital payments are likely to be more constrained and will no longer be mandated. “It’s very likely that the new administration, buoyed by Congress, will favor Medicare Advantage plans,” he says. “Much of the push for changes in physician and hospital payments will depend on the extent to which Medicare Advantage plans can move more aggressively to APMs.”
Nedza believes that any new congressional legislation will include provisions to lessen the impact of hospital value-based programs such as the hospital readmission program by lessening penalties for readmissions, decoupling Medicare’s Hospital Compare ratings from payment, granting exemptions to safety net hospitals, or delaying changes to disproportionate share hospital (DSH) payments.
Other possible changes
White believes dramatically expanded account-based plans such as health savings accounts and health reimbursement accounts, and the use of data and tools to promote healthcare transparency, will take off this year. “Inspired by a desire to empower consumers and consumer-based healthcare, Congress will enact changes and incentives that will put consumers and payers, including employers, in the driver’s seat,” he says.
On another front, Nedza expects hospitals, physicians, and managed care organizations to continue to face strong forces that are focused on controlling costs. “The ability to risk-adjust across populations and to modify care delivery to manage this risk will determine success,” she says. “This means that the focus will move to managing overuse of services, technology, hospitalizations, and specialty drugs while leveraging models that link quality outcomes to cost at a patient, hospital, and carrier level.”
Ultimately, Peter Hilsenrath, PhD, Joseph M. Long Chair in Healthcare Management and professor of economics, University of the Pacific, says a robust infrastructure spending program coupled with tax cuts touted by Trump could provide the fiscal stimulus to alter the macroeconomic environment marked by low interest rates, expansive monetary policy, and anemic growth. “Higher growth rates, if realized, will provide more latitude for growth in healthcare,” he says. “On the other hand, protectionism, or interest rates that rise too far too fast, could derail growth and possibly usher in a recession with negative implications for healthcare.”