Election Results Likely to Change Health Care Reform Landscape, But Exactly How Remains Unclear

While the 2016 election has officially come to a close, much speculation commences as stakeholders look to the fate of health care reform and the Affordable Care Act, also known as Obamacare. With the election of Donald J. Trump as president, and perhaps more important, single-party rule in Congress and the Executive branch, the repeal and replacement of Obamacare appears to be on the short list of high-priority items to address. Exactly what this means is of paramount importance to our clients, who are on the front lines of transforming health care from fee for service to a value-based world.

The political discussion of Obamacare has focused on skyrocketing premiums in the individual insurance market, as well as philosophical opposition to the health insurance mandate and practical concerns about the impact on small businesses. The reality of the Affordable Care Act, however, is that it also involved a wholesale expansion of Medicaid and a slew of changes to Medicare, including the creation of the Center for Medicare and Medicaid Innovation (CMMI) with its $10 billion budget. So does “repeal and replace” extend to CMMI and the more than 25 service delivery and payment reform demonstrations that it has spawned?

On paper, the simple answer would be no, as it is hard to envision a scenario where there is a large political constituency that opposes lowering costs while maintaining or improving quality, the avowed goal of demonstrations such as accountable care organizations (ACOs) and bundled payment. Moreover, many of those demonstrations currently operate under contracts between private entities and the federal government, which are unlikely to be undone given the investments made to get them going.

In reality, the answer will be more complex. Here is what might happen in the coming weeks and months:

  • Amidst the scramble to fill positions in a new administration, the scope and political viability of repeal and replacement of Obamacare will need to be defined. Does that scope include just the individual health insurance market, or does it go beyond that to Medicaid expansion, or even to “throw the baby out with the bathwater” scenarios that include significant changes to Medicare? An important thing to keep in mind is that there is not a filibuster-proof majority in the Senate, so only budget-related items can go through the Senate with a 51-vote majority. Most likely, repeal and replacement of the Affordable Care Act means some changes to the individual health insurance market, and that wholesale changes to Medicaid and Medicare are likely to be wrapped into a broader discussion of entitlement reform in the context of a budget deal. None of that will be easy or quick.
  • Regulatory proposals that are pending finalization will either be rushed out the door, or frozen for many months. This could include the proposed addition of hip fractures to the already mandatory bundling of Medicare-funded joint replacement episodes in 67 markets and the proposed addition of mandatory cardiac bundles in 98 markets. More likely than not, these proposed regulations will hit a speed bump of uncertain duration. At some point, however, fiscal realities will set in and budgeteers looking for savings will find that existing and proposed demonstrations are the most shovel-ready proposals out there. Importantly, section 3021 of the Affordable Care Act provides a ready-made framework to expand these types of demonstrations if, after a formal evaluation, the CMS Actuary determines that the demonstration either lowers costs or improves quality, or both.

It is also important to keep in mind that the Affordable Care Act, while critical, is not the only game in town with respect to health policy. During 2014 and 2015, Congress passed, and the President signed into law, the IMPACT Act, Protecting Access to Medicare Act, and the physician fix (known as MACRA). These bipartisan efforts contain fairly prescriptive language with detailed policy goals and deadlines, which can’t be easily changed without a change in law. These policy goals include: uniform quality metrics across post-acute settings, hospital discharge planning rules, the SNF Value-Based Purchasing Program, and a comprehensive framework designed to drive doctors (and other payors besides Medicare) towards value-based care.

So, amidst all this uncertainty, now is not necessarily a good time to take your foot off the gas pedal of value-based transformation. For instance, in the case of the SNF Value-Based Purchasing Program, the “performance period” for determining readmissions penalties (and possible bonus) starts January 1, 2017, impacting future rate adjustments. Betting on a change in that law might not be a good idea since there is a $2 billion ten-year savings number attached to this program.

What is more certain is bipartisan commitment to the Triple Aim and value-based care transformation. Both Democrats and Republicans generally agree U.S. health care needs to move away from fee for service to an outcomes-based and value-driven system. Despite the disagreements and opinions regarding Obamacare, there is a shared goal and shared vision to reduce unnecessary health spending and improve health outcomes. So while the approach will most certainly shift, providers and health plans can rest assured that the goal of value-based care they have been diligently working toward still prevails.

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