On October 12, 2017, the President halted federal payments for cost-sharing reductions (CSRs) for insurers that subsidized the cost of coverage for certain low-income eligible enrollees. A parallel executive order instructed the Department of Labor (DOL) to study how to relax rules on association health plans, allow short-term health insurance policies with limited benefits, and broaden the ability of employers to give workers money to buy their own coverage.
While it is not clear as of this writing if President Trump’s recent health care executive orders will move forward without significant modifications, other funding cuts are already taking place and will soon lead to new financial, clinical and operational pressures on providers. The President’s executive orders intensify the impact of deepening reductions in Disproportionate Share Funding and the elimination of grants to federally qualified health centers. Taken together, these chips in the structure of health reform could prove profoundly destabilizing and damaging to health care providers. Assessing the current and potential impact of the Administration’s directives, as well as addressing funding threats and rising numbers of uninsured are crucial for long-term success.
The Administration’s moves to ensure the demise of former President Barack Obama’s health care law and resulting uncertainty over whether healthy people will buy coverage in the individual market has magnified the already escalating premiums for 2018 coverage. Uncertainty, minimal enforcement of the individual mandate, tighter enrollment criteria and rising premium costs appear to be seriously eroding health care coverage gains over the last few years. The number of U.S. adults without insurance increased by nearly 3.5 million this year, according to the Gallup-Sharecare Well-Being Index, which asks a random sample of 500 people each day whether they have health insurance. The percentage of U.S. adults without health insurance rose to 12.3 percent in the third quarter (Q3) of 2017 – up 1.4 percentage points since the end of 20161.
What Has Changed with the Executive Orders?
To be clear, the CSRs had been on uncertain judicial grounds for months. Prospects that the payments would be salvaged have largely collapsed under the President’s recent tweets that he would not support “bailouts to insurance companies.” Still, Congress may yet appropriate these CSR funds, and some Congressional leaders appear prepared to strike a deal that would extend them for two years, if they gain assurance that the President will sign the legislation.
If a deal falls through, though, this executive order puts providers in a severe bind. As “insurers of last resort” through emergency room access, health systems are likely to see uninsured patient loads and bad debt soar once again, causing operational and financial issues.
Another executive order instructed the Department of Labor (DOL) to study how to relax rules on association health plans, allow short-term health insurance policies with limited benefits and broaden the ability of employers to give workers money to buy their own coverage. The DOL is expected to fashion rules to help individuals and small businesses unite to buy insurance through association health plans.
Buying insurance as a collective is not a new concept. The Affordable Care Act’s ban on pre-existing condition exclusions, rating rules and exchange markets obviated the need for association plans. Even with new rules, it is uncertain to what extent association plans will influence the individual market. Trade and professional groups and community organizations must decide to offer and market the new-style association plans, and insurers would have to step up to design, likely underwrite and administer them.
More Pain for Providers
In tandem with weakening the ACA exchange markets, other funding threats loom:
- Disproportionate Share Funding (DSH) Cuts: Health systems in states that expanded under the ACA are currently experiencing deepening cuts in DSH for indigent patients, ostensibly to offset those funding gains from “covered lives.” With 2017 as the base year for 2019 calculations, 2019 may bring the biggest negative financial impact, since 2017 will reflect the largest proportion of the gains in insured lives before the effects of “Trumpcare” hit in 2018 and beyond.
- Federally Qualified Health Centers (FQHC) “330” Grant Cuts: Payments to FQHCs through their “330” grants have not been renewed. FQHCs have become a critical part of the fabric of integrated delivery networks across the country as the “safety net” shouldering many of the uninsured and underinsured costs. Their ability to care for the uninsured may be severely compromised at this crucial time, so non-renewal of FQHC grants will also have significant implications for hospital emergency departments.
What Won’t Change
Medicare will continue to grow rapidly as our population ages. With restrictions on immigration and a slowing birth rate, Medicare will become more and more important to the bottom line of health systems and other providers.
The trend of less money per member but more covered Medicare members will continue. Similarly, while Medicaid expansion is still potentially at risk through Congressional machinations, the one thing that will hold true for Medicaid is that there will be less money per member.
Six Steps for Countering These Threats
Successfully preparing for these funding and operational challenges begins with establishing a clear understanding of local markets and each organization’s operational readiness. Once providers scope the market conditions, including sizing populations who could and will be affected, and identify gaps in their ability to respond, they can create effective plans and take action.
- Assess the Impact
For each market in which they operate, providers should determine:
- The numbers of CSR-supported exchange members in their service area
- Utilization trends for the population in the past two years
- Projected growth of the population in the next three years
From those numbers, organizations then need to estimate the likely increase in uninsured and in those ineligible for CSRs who will be unable to pay rising out-of-pocket expenses.
This assessment needs to extend beyond the four walls of the hospital to the available support for discharged patients. For example, consider the following:
- Is there an adequate primary care provider (PCP) network and incentive program to reward convenient after-hours alternatives for avoidable ED use?
- Are there adequate care management programs and community-based organizations to which providers can connect at-risk and uninsured patients once they leave the hospital?
- Are there specific programs to address the social determinants of health needs for high-need, high-cost populations?
- Are there reliable and/or electronic care coordination pathways between behavioral health specialists, PCPs, medical specialists, and care managers?
- Prepare for Higher Volumes in the Emergency Department
Armed with assessment results and having answered key questions, providers should then create plans for gap closure and evaluate possible performance and capacity issues caused by increases in emergency room visits and inpatient admissions. New patient loads will affect emergency department capacity and throughput, as well as linkages to primary care, quality and cost. It will also be critical to manage access for the new uninsured without compromising customer service for covered patients. As more people avoid primary and specialty care because they cannot afford it or cannot be seen at FQHCs, can the ED and inpatient units handle the potential additional volume? Can the facility flex beds as needed? How can more capacity be “unlocked” through scheduling and patient/work flow redesign?
- Strengthen Ties to FQHCs
Sustained viability of federally qualified health centers is in the best interests of both patients and other providers. If your health system or hospital is not already affiliated with FQHCs, you should reach out to discuss ways in which you can mutually support each other in addressing the likely influx of newly insured. Some possibilities:
- Offer no-charge e-consults from health system specialists in order to help FQHC primary care physicians manage uninsured patients and keep them healthy (out of ED/hospital beds)
- Instigate rotations of health system primary care and specialty residencies through FQHC to help with expanded uninsured care loads
- Consider co-location of an FQHC near the ED
FQHCs can play a vital role in keeping uninsured patients healthy once they leave a hospital ED or an inpatient stay. Providers can leverage the FQHC partner with community benefit support to offset the cost of caring for uninsured patients upon discharge to prevent further visits. Discharge planning should include the right warm handoff information for newly uninsured to get them to a post-discharge FQHC primary care visit, fill prescriptions and gain access to care management and other key community supports as needed to prevent re-admission.
Health systems and physicians also can use their advocacy resources to help lobby for FQHC funding and alternatives as a proactive measure to help keep emergency department volume sustainable and ensure patient access to primary care.
- Prepare for increases in bad debt
Providers also will need to account for the likely corresponding rise in bad debt. The health care cost shift from employers to employees through larger co-pays and deductibles has helped make patients the third-largest payer group to providers, behind only Medicare and Medicaid. Even with insurance, patients have been struggling to afford care as their deductibles and out-of-pocket costs have been climbing.
- Prioritize Population Health Management Efforts
With Medicare set to grow but paying fewer dollars per Medicare member, the ability to manage populations effectively under value-based contracts is only becoming more important. The key is reducing the total cost of care while improving quality outcomes through population health management.To that end, providers should accelerate value-based payment agreements and other collaborative services arrangements to help build experience in managing risk. Making these arrangements work requires implementing clinical and operational initiatives to bolster quality while restraining costs. An engaged workforce can make all of the difference, first in offering up solutions and opportunities and then in carrying them out.Providers will be most effective when they are able to show health plans, states and CMS their ability to develop comprehensive networks that enable management of assigned populations for a lower total cost and improved health and satisfaction outcomes.
- Accelerate Other Community Collaborations
Public-private partnership between county and district health care systems with local tax revenue bases and private health systems, IPAs, ACOs, clinics and medical groups will gain increased emphasis. Most counties already have a local coverage option but these will likely need to be both expanded and formalized in order to function more like insurance. This change will allow for more reliable premium budgets for providers to continue to make key investments in population health management systems, provider networks and managed care value based contracting that will remain critical for the burgeoning Medicare population.For those areas without this option already in place, providers may work with other stakeholders to evaluate the opportunity to educate the local community and raise the local tax base to provide a community coverage option for increased uninsured.In addition, public-private partnerships could bring together local and regional grant-makers to:
- Support investments in a local, sustainable funding source for the newly uninsured
- Make investments in population health management infrastructure and a network of community based organizations
- Provide temporary core operating support for impacted FQHCs, emergency rooms and physicians
Many providers are already actively working on performance improvement efforts aimed at creating additional capacity, reducing cost and improving quality. The executive orders and other funding threats make these activities more important than ever. If uninsured patients seeking primary care inundate emergency departments, partnerships with urgent care centers and primary care providers to treat lower-level acuity patients will help reduce volume and encourage the appropriate setting for care. Finding ways to cope with the new operational, clinical and financial challenges are crucial to both providers and patients.
For more information on how to prepare for President Trump’s executive orders on healthcare and other changes in reimbursement, please contact Cindy Ehnes at email@example.com or Allen Miller at firstname.lastname@example.org or (213) 259-0245.
1 Gallup-Sharecare Well-Being Index, October 20, 2017