Five ways an ACA repeal could hurt hospitals

March 7, 2017

While Trump has touted Obamacare as a “disaster,” some healthcare experts say the change could negatively impact hospitals in a variety of ways.

 

 

At a press conference on February 16, President Donald Trump stated that he plans on submitting reforms to the Affordable Care Act by early or mid-March. While Trump has touted Obamacare as a “disaster,” some healthcare experts say the change could negatively impact hospitals in a variety of ways.

A recent study commissioned by the Federation of American Hospitals (FAH) and the American Hospital Association (AHA) found that if an ACA repeal occurred without an immediate replacement, hospitals stand to lose upward of $102.9 billion between 2018 and 2026.

Here are five other ways an ACA repeal could negatively impact hospitals.

 

 

 

 

An ACA repeal might result in a healthcare policy shift away from healthcare insurance exchanges toward providing block grants that leave it up to individual states to determine how best to allocate funding, says Nancy Lakier, MBA, BSN, founder and CEO, Novia Strategies consulting firm. If this occurred, these funds may or may not go to the sources that provide the best care for patients.

“This shift might require that each state implement its own quality indicators, a departure from the current national quality indicators that are used to ensure hospitals and other providers meet consistently high standards,” she says. “Such a change would make it difficult to measure the value of healthcare. As a result, analysts predict that many hospitals would receive even lower reimbursement than they have in the past, presenting significant financial challenges as they are faced with the likelihood of absorbing additional costs for uncompensated care.”

 

 

 

 

Susan Nedza, MD, MBA FACEP, senior vice president, Clinical Outcomes, MPA Healthcare Solutions analytic healthcare consulting firm, points out that hospitals are volume dependent organizations and provide very high fixed-cost services. “If ACA enrollment drops, they may be unable to adopt innovative treatments such as proton beam therapy or technologies such as robotic surgery,” she says. “They will also need to re-evaluate any debt that has been financed based (e.g., electronic health records and radiology) upon projections that depended on ACA-driven utilization.”

 

 

 

 

In addition, if the ACA is repealed, health plans will not be held to targeted medical loss ratios which govern how much of every premium dollar is spent on actual care. “This means that they will have more flexibility to spend on administrative functions, technology, and marketing,” Nedza says. “Payments to hospital and physicians may go down.”

 

 

 

 

Repealing the ACA without simultaneously replacing it with a similar program will also affect patient care in a negative way. The study by the FAH and AHA estimated that the number of uninsured patients would grow by 22 million if the ACA is repealed.

This is based on projections that under a repeal, there would be 50 million uninsured Americans instead of a projected 28 million under the ACA within the same time period. “This scenario will have significant, far-reaching effects on patient care,” Lakier says. “Patients who most need the support of the federal government to access healthcare will be negatively and disproportionately impacted.”

Nedza says emergency department utilization will spike in some communities. “This will lead to higher costs and potentially delayed treatment that results in hospitalization,” she says.

 

 

As directed by the ACA, the Center for Medicare and Medicaid Innovation (CMMI) enabled CMS to implement value-based care initiatives. “If the center is not funded going forward, hospitals that have invested in bundled payments and other initiatives may choose to withdraw, and in doing so they will lose money on the infrastructure that they have put into place to focus on value across episodes of care,” Nedza says. “This change in course will impact private payers that have been leveraging CMS activities to drive risk-based contracting.”

In commenting on value-based care initiatives, Lakier points out that the ACA and CMS were driving toward value and coming up with a variety of efforts that ultimately would reduce costs and ensure quality by determining new processes for hospitals to provide care across the continuum as well as for specific segments of the population, such as orthopedic and cardiac patients. “The Trump administration could decide to diminish the role of CMS in rolling out new measures and reverse the progress that has been made in moving the country toward reducing clinical variation across patient populations, standardizing best practices, and ensuring quality care across the continuum,” she says.

Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.