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Decrease in the Cost of Uncompensated Care

According to a study conducted by the Kellogg School, there is a significant decrease in uncompensated care cost that hospitals must provide. This decrease is caused by the expansion of Medicaid that became possible because of ACA rather than by individuals purchasing insurance.

Hospitals’ UCC Dropped in Medicaid Expansion States

The same study affirms the prediction stated in the Assistant Secretary for Planning and Evaluation’s  (ASPE) brief. The results revealed that hospitals’ uncompensated care costs fall significantly among states with expanded eligibility for Medicaid. In the course of one year of expansion, the uncompensated care cost dropped from an average of 4.1 percent to 3.1 percent of the operating costs of hospitals. These findings evidently prove that the Affordable Care Act is generally advantageous for hospitals that are located in states with expanded Medicaid.

Hospitals’ UCC in Non-Expansion States were Unaffected

In the case of hospitals in non-expansion states, the uncompensated care cost remained practically the same. One of the researchers, Garth Waite, says that they have “found no real break from previous trends for uncompensated care in states that did not expand Medicaid”.

Advantages of Insurance Expansion Beyond UCC

In a study conducted by the Georgetown University Center for Children and Families in June 2016, the researchers found that apart from a significant reduction in UCC, the insurance expansion has brought other outstanding positive effects on safety net hospitals and clinics.

The expansion has a positive financial impact (increase in reimbursement) on the overall bottom lines of safety net institutions in expansion states, which allows them to hire more clinical staff, open new health facilities and clinics, as well as improve facilities and equipment. Furthermore, hospitals in expansion states were found to have the ability to move towards integrating and improving care.

Hospitals are losing large sums of money every year because of uncompensated care. This is the reason why protecting your hospital’s financial health from debt caused by uncompensated care cost should be your top priority.

The Midland Group works as a trusted business partner of your hospital and is a recognized leader in assisting hospitals in managing their hospital revenues effectively and efficiently. Get in touch with our financial specialists immediately to learn more information about the most suitable revenue cycle solutions for your hospital.

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The Immediate Implications of Healthcare Repeal

House Republicans are attempting to fulfill their long pledge to repeal and replace the Affordable Care Act (ACA). The party is a step closer to delivering on their promise to undo mandated insurance coverage. Even though this is a significant step, there were previous steps which may indicate that the legislative road ahead could be a long one.

The direction the new plan will take is somewhat uncertain. There have been diverging issues which have proved challenging to reconcile even within the party. Some Republican legislators want to keep some elements of Obamacare in their states such as protection for people with preexisting conditions. On the other hand conservatives want to see broad Medicaid cuts and a waiver of the issue of preexisting conditions which will leave states to decide.

Despite the uncertainty, it is possible to predict the groups of people who are likely to feel the impact of the repeal and replacement of the Affordable Care Act.

Tax Credits Under Obamacare and The Replacement Proposal

One of the main centerpieces of the replacement proposal is the issue of refundable tax credit. Obamacare subsidies are based on the enrollee’s income. It is designed to keep the premiums within 10% of his income to ensure that more low income earners can afford it. Additionally, enrollees who pick a plan that is below the set benchmark can get even lower premiums.

One of the biggest oppositions to this plan comes from some middle class Americans who do not receive assistance because they are above the 400% poverty level which was set by the Affordable Care plan. To solve this problem, the new plan proposes to base tax credits on a person’s age. This way everyone can get assistance regardless of age.

Young Americans

The new plan based on age is more generous to young Americans under the age of 30. Insurers may charge older enrollees more while bringing down premiums for young Americans. If you are under 30 and your income is below $215,000 you may be eligible for a tax credit of $2,000 which goes to subsidize monthly plans.

Middle Class Americans

Middle class Americans can claim full tax credits if they are making $75,000 or less. Under the Affordable Care Act, the cap was at $47,000. For those with an income exceeding $75,000 the subsidies will continue to be phased out until they attain $215,000 in income.

Low Income Earners

Obamacare extended Medicaid to cover low income Americans. The proposed plan will reduce support for Medicaid funding. Those who are against the new plan feel that it will have a very serious impact on not only the poor, but other vulnerable groups such as children, seniors and people with disabilities. The new law may be even harder on low income earners with preexisting conditions.

According to estimates from the congressional budget office, 24 million Americans could be left without coverage after a period of 10 years under this plan. The new plan will not be based on the geographic location of the enrollee making it neutral across different regions.

While the AHCA narrowly passed the House on May 4, experts predict it will face a brutal battle in terms of passing the Senate. As it stands, Obamacare is still the law of the land. All we in the healthcare industry can do is wait as the drama continues to unfold.

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The Struggle of Rural Hospitals

Rural hospitals have long been facing troubles, even with the ACA. Even if the ACA were to remain intact as it is, hundreds of rural hospitals across the United States are in so much trouble that they might have to shut their doors. This is the result of a few different factors, such as smaller profit margins and fewer patients. The ACA, which provides coverage, including Medicaid, to millions of previously uninsured Americans across the country, also helped rural hospitals. Since patients had coverage, they were better able to afford their medical care, which meant that hospitals were getting paid.

Loss of Coverage

With the repeal of the ACA, however, those millions of Americans who received health insurance would lose their coverage. Not only that, but it would also halt the expansion of Medicaid, meaning that those who might have qualified no longer will. This puts rural hospitals back in a vulnerable position. Without coverage, patients will no longer be able to afford their medical care, which means bills will once again go unpaid. Hospital bottom lines will suffer. Healthcare workers will lose their jobs, and many rural hospitals may be forced to close down.

Replacement of the ACA

Much of the fear felt by rural hospitals, and millions of Americans, over the repealing of the ACA only takes that action into account. The speculations made about what could happen don’t take into account any type of replacement program. Many republicans have made proposals for replacement, not wanting to repeal without replacing. These proposals include such actions as enabling the sale of insurance across state lines, which is currently not allowed under the ACA. The hope with this policy is that competition will increase, and therefore lower insurance premiums, making them affordable to more Americans. Other provisions include such things as the ability to roll over HSAs as well as the ability to deduct the cost of premiums from income taxes, all of which is directed at truly trying to make insurance coverage more affordable.

The potential repeal of the ACA could have some dire consequences to the bottom lines of rural hospitals across the country. However, even with the ACA, many rural hospitals were still in trouble; the ACA only took some of the pressure off. And, the impending consequences only take into account the repeal of the ACA; they don’t include its replacement.

Many Republicans have made proposals that could allow rural hospitals to remain viable, but they have yet to be looked at since Trump’s inauguration. It is important, though, that the ideas from these proposals be kept in mind as a final proposal is drafted, to help give rural hospitals their best chance for survival.

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Repeal of the Individual Mandate

Trump’s executive order cannot overturn the regulations of the ACA; however, it does provide federal governments with the flexibility to implement or get rid of some of the penalties and taxes. As of right now, under the individual mandate, everyone is required to have health insurance, and those who are uninsured are charged a tax penalty. The penalties are based on your annual income. Depending upon this information, you will be charged which ever one is highest, the current maximum penalty being $2,085 per person. The individual mandate is still currently in place, but there is great speculation that it will be one of the very first provisions to go.

Open Insurance Market

Another part of the ACA that Trump has pledged to get rid of is the restriction of the sale of health insurance across state lines. In an effort to move forward in this direction, his executive order urges for a more open insurance market. Right now, the insurance market is very restricted, and many insurance companies are limited to the areas in which they can sell. And practices are limited on which insurance plans they can accept. This has caused insurance premiums to soar, which causes problems for patients, especially those who can barely afford basic coverage. However, by allowing sale across state lines, patients have a wider selection of choices. More options mean more competition, which can help to lower premium costs. And potentially lower costs could mean that more patients can afford coverage.

Attract Insurance Companies Back

Many insurance companies have reported losses as a result of being involved in the marketplace. Some, including Humana, have seen as much as one billion in losses after only one year. These losses have put an unnecessary amount of stress on participating insurance companies. As a result, participating companies have had to either raise their premium costs, cut back on the coverage they offer through the ACA, or even pull out altogether. And with insurance companies pulling out, more of the burden is placed on those remaining.

By relaxing the regulations, and increasing flexibility, this executive order could potentially make the individual marketplace more appealing to insurance companies again, bringing back those who have previously dropped out and encouraging those on the fence about leaving to stay.

It appears as though, through this newest healthcare executive order, that the President wants to help make health care coverage more affordable, which will, in turn, help providers to get paid for their services rendered. It is still unknown exactly how the executive order will change the ACA as it stands now. However, Trump still remains steadfast in his desire to repeal the law, and this order is a step toward that repeal.

The post What Trump’s Newest Healthcare Executive Order Means for Your Organization appeared first on The Midland Group.

Value-Based Care

It used to be that patients would go to the hospital, receive services and then be expected to pay for those services. While this model makes sense on one level, it also has a few downsides. One is that it gives providers an incentive to order more tests and procedures, in order to increase the total a single patient owes. Another is that it encourages providers to take on more patients. In doing so, these providers risk giving subpar care, but still expect to be paid just the same. Fee for service models actually drive up healthcare costs.
Value-based care shifts the focus of the provider from the practice to the patient. Instead of being paid for the services rendered, providers are reimbursed based on the quality of the care they give, and are rewarded for doing so. This care aims to provide better care for patients, improve the health of the population in the area of the provider, and reduce healthcare costs. The ACA supported this shift. So, what happens if the ACA is repealed?

The Trump Administration and the ACA

While nothing has been done with the ACA as of yet, there has been a lot of speculation about what could happen. For one, Trump has voiced his support for the reduction of funds given to social assistance programs, including Medicare and CHIP. This is not just concerning for patients who depend on these programs, but to healthcare providers as well. Social assistance programs help to cover some of the costs that patients might not otherwise be able to pay. This could potentially take focus away from value-based care as healthcare providers struggle to get paid, and try to find other ways to make up the revenue difference.

The Republicans know that they cannot simply repeal the ACA and have nothing ready with which to replace it. Doing so could drive the healthcare system completely into the ground. For this reason, Republicans are pitching ideas for replacements. One such idea is the Patient’s Choice Act.

This act keeps some of the ACA’s provisions, but aims to get rid of healthcare.org, and instead give control to the states. Premium prices would be controlled by an incentive system that rewards insurance companies for insuring higher risk patients. This act also promotes health savings accounts. The Better Way Forward bill, which has also been proposed, aims to increase the percentage limit placed on the insurance companies for charging patients as they get older. It also states that insurance companies cannot drop patients for expensive procedures or reassess them every time they wish to change their plan.

MACRA

The Medicare and CHIP Reauthorization Act (MACRA) was signed into law by former President Obama in 2015. It repealed the sustainable growth rate formula that was used to calculate Medicare payment rates to doctors, and instead calls for annual updates. It put into place a merit-based incentive payment system and ways to develop alternative payment models. It also requires that Centers for Medicare and Medicaid Services adopt a Quality Payment Program, which shifts payments away from fee for service to value based. While the Republicans and Democrats are deeply divided on several issues, MACRA legislation actually saw significant bi-partisan agreement, and passed with very few against it, thus showing that despite their differences, republicans are just as much in support of a value-based healthcare system.

The future of the ACA is uncertain, as what President Trump plans to do remains to be seen. One thing is for certain, there is widespread support for value-based care. Even in the event of ACA repeal, there should be little, if any, change to this care, and providers should continue to put their patients first.

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The ACA has made a world of difference for the uninsured. So what will a Trump presidency mean for the uninsured?

Passing a Budget Reconciliation Bill

Back in the beginning of 2016, President Obama vetoed a budget reconciliation bill that contained provisions affecting the ACA.  With Trump in office, and a Republican-controlled Congress, a similar bill would be more likely to pass and be approved.  This bill can be used to get rid of several of the ACA’s important elements.  It could eliminate tax subsidies for premiums, put an end to Medicaid expansion as well as get rid of the taxes that are used to pay for some of the ACA’s provisions.

However, a total repeal is highly unlikely as Republicans understand that something would need to take the act’s place. Repeal would also require Democratic approval, which is almost guaranteed impossible. Despite this fact, the ACA is most likely going to be facing some major changes.

Patient’s Choice Act

First put forth by Republican House Speaker Paul Ryan in 2009, the Patient’s Choice Act (PCA) keeps some of the ACA’s provisions, but heads in a completely different direction.  It aims to keep preventative services, population health management and broad coverage options as high priority, but the similarities end there.  The PCA eliminates healthcare.gov and instead shifts responsibility to individual states.  Premium prices would be controlled through an incentive system that rewards insurers for covering high risk patients.  Doing this would increase competition between insurers to offer the best services for the best prices.  The PCA also wants to put an end to enrollment periods and instead adopt automatic enrollment and promote health savings accounts, and patients would become eligible for tax credits.

Better Way Forward

The Better Way Forward proposal was first introduced in June 2016 by Republicans. This proposal adopts tax credits over the current penalties for no health insurance rules. It changes the current limits to increase premium rates for patients as they get older from no more than three times as much as what younger, healthier patients are being charged to up to five times as much.  And the exact amount can be adjusted by individual states as they see fit.  This proposal states that insurance companies cannot drop patients simply because they are undergoing expensive events, nor can companies reassess patients when they want to change their plan.  It also proposes that patients be able to purchase insurance across state lines, which could greatly increase competition and bring about some balance.

Trump’s First 100 Days

Not much concrete is known about Trump’s plans for his first 100 days.  Some things that have been floating around include eliminating penalties for those who have no insurance, allowing coverage across state lines, allowing citizens to deduct the full cost of their insurance from their tax return and increasing cost transparency.  There is nothing regarding what will happen to Medicaid or what will be done about closing the coverage gap.  He has also made no assurances about keeping such provisions like requiring companies to cover patients with pre-existing conditions or allowing children to stay on their parents’ insurance plans until the age of 26. While these provisions are likely to stay, having said nothing about them has led to some fear. 

Potential for Reducing Funds for Social Assistance Programs

One of the most frightening things for many people, especially those who rely on the ACA, and wouldn’t have coverage without it, is that Trump appears to be advocating for a reduction to programs like CHIP and Medicaid.  This is also upsetting news for healthcare providers.  Statistics have shown that in states where Medicaid has been expanded, hospitals have been able to start seeing an increase in payments made for services rendered.  States without expansion are projected to see significant losses.  If assistance programs see less funding, patients who rely on these programs will no longer be able to pay (if they even qualify at that point) and hospitals will see a rather large losses in their revenue cycle.

The results of the 2016 election have led to a lot of anger, confusion and questions regarding many things, including healthcare.  No one can really know what is going to happen until it does, but it is quite likely that healthcare will look very different over the next couple of years.  Whatever comes, it is important that providers continue on the path to value-based healthcare, for the benefit of their patients as well as their own.

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