November 7th, 2012
Editor’s note: For more on what yesterday’s election means for health policy, see Tim Jost’s post published earlier today on Health Affairs Blog.
With the election season now (blessedly) behind us, and the endless barrage of campaign ads now magically gone from our lives—for at least a couple of years—we can now step back and ask, “What does the outcome of the election mean for the nation’s health systems and provider community?”
For providers, yet another veil of uncertainty has been lifted regarding the future of the Affordable Care Act: payment reform is in fact here to stay, with the Administration committed to continued rollout of the law’s provisions over the next four years. The need to transform patient care across the continuum just became that much clearer. But it’s worth revisiting a few looming questions for providers that remain following the election:
- What are the near-term decisions Washington must make that could significantly impact the economics facing providers and their ability to provide care to patients?
- What’s next for the rollout of the Affordable Care Act?
- What are the implications for providers in the long-term?
What’s Next In Washington?
With the election over, both the president and the current Congress will turn their attention to looming deadlines on major issues including expiring tax cuts, the sequestration, and the Medicare physician payment fix. The president and Senate Majority Leader Reid have signaled that they would like to reach an agreement before Congress adjourns on the general contours of the legislative package including reductions in spending and changes to the tax code. It’s not clear if the parties can reach agreement on the framework, in which case we may see considerable brinksmanship before Congress adjourns in December.
Either way, late this year or very early next year current law is most likely to be extended at least through August to give the new Congress time to craft the large package of tax, entitlement, and deficit-reduction reforms. Final passage of this measure would be targeted for late 2013. In either scenario, Medicare and Medicaid likely will be part of the deficit discussion, and formerly untouchable elements of the Medicare program (e.g. changes to beneficiary cost-sharing) are being discussed alongside additional provider cuts.
Continued Rollout Of The Affordable Care Act
As the Administration continues to implement the various provisions of the ACA, it’s worth noting that some aspects are rolling ahead faster than others. The Department of Health and Human Services has released rules regarding payment reform pilots (ACOs, shared savings programs, and bundled payments) as well as pay-for-performance initiatives (value-based purchasing, readmissions penalties, etc.). And reductions in Medicare payment updates to providers are expected to go forward on schedule.
Coverage expansion will be more of a mixed bag. Across the next few months we will see how many states meet deadlines for establishing health insurance exchanges, and whether Governors and legislatures choose to opt into or out of the ACA’s Medicaid expansion following the Supreme Court’s decision earlier this year. The potential misalignment of the timing of payment reductions and coverage expansion only underscores the need for hospitals, health systems, and other providers to continue their efforts to contain long-term cost creep.
Implications For Providers In The Long Term
For most provider organizations, the election’s outcome represents a confirmation of the twin efforts so many have already started to control costs and transform patient care. A few implications stand out:
- Controlling costs and shifting management of cases to more efficient and higher quality settings remains critical in advance of potential Medicare payment reductions. National attention will quickly shift to resolving the “fiscal cliff.” With health care representing nearly a quarter of the federal budget, any attempts to resolve the sequestration cuts or reduce long-term deficits will almost certainly include incremental reductions to federal health care programs. Providers must double-down on lowering costs by improving efficiency and quality.
- The transition toward new payment models will continue apace. The new payment models established by the ACA—and increasingly replicated by the private sector—are here to stay. Expect contingent payment to become the “new normal” as CMS expands the Hospital Value-Based Purchasing Program and targets both readmissions and hospital-acquired conditions in upcoming pay-for-performance programs. Further, expect focus on bundled payment and ACO models to intensify as CMS looks to improve Medicare’s affordability, efficiency, and quality.
- All eyes on the states as coverage expansion looms. With the president’s reelection, lingering questions surrounding the employer and individual mandate seem to be resolved. The conversation now shifts from the federal level to state Capitols where providers must closely track and influence progress on Medicaid reform and expansion as well as development of state health insurance exchanges, two key enablers of anticipated coverage expansion.
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