Medicaid Expansion Likely on the Chopping Block

Expecting significant movement to repeal and replace the Affordable Care Act (ACA) early in the next Administration, financial analysts have expressed concern that the proposed changes to Medicaid are likely to have the largest financial impact on hospitals. Since implementation, the ACA marketplaces/exchanges have garnered more media coverage, but hospitals saw more activity from those newly covered by Medicaid.

 

Losses from the elimination of the Medicaid expansion could include $1.057 billion in revenue, which hospitals gained through an increase in Medicaid days of 1,057,730 at all hospitals from 2013 to 2015. States that initially expanded Medicaid in 2014 saw Medicaid revenue increase (mean annual increase of $3.2 million per hospital) compared with hospitals that did not expand Medicaid eligibility. The financial impact for the expanded-eligibility states could, and probably will, be worse, according to recent research. (“After ACA Repeal, Hospitals Will Feel Medicaid Changes the Most,” HFMA Weekly News, November 23, 2016)

 

“Most analyses of the financial impact of repeal-and-replace on hospitals do not track the sources of coverage for the 20 million people who the Obama administration says gained insurance coverage under the ACA. A total of 12.7 million were covered through the ACA’s government-run marketplaces—as of the end of the previous open enrollment period—and Medicaid enrollment had grown by more than 15 million since October 2013, when expanded Medicaid eligibility started.” (“After ACA Repeal, Hospitals Will Feel Medicaid Changes the Most,” HFMA Weekly News, November 23, 2016)

 

Medicaid Block Grants

 

One of the most talked about replacements for Medicaid expansion remains shifting the state-federal public insurance program to a block grant, thereby allowing states to have wider spending discretion.

 

A key detail surrounding a Medicaid block grant is whether the funding would be set at current federal Medicaid spending levels or those from before the expansion started in 2013. Total Medicaid spending in FY15 hit $532 billion; about 62 percent of that was provided by the federal government. Even if the total block-grant funding is set at the current higher level, the financial impact on hospitals could worsen in future years if the annual spending increase is set far below medical inflation—as is the case in many such proposals. (“After ACA Repeal, Hospitals Will Feel Medicaid Changes the Most,” HFMA Weekly News, November 23, 2016)

 

In September the Rand Corporation published an analysis of the financial impact of an ACA repeal and replacement. It projected a repeal would increase the number of uninsured by 19.7 million, while a replacement that included Medicaid block grants would further boost the number of uninsured by 5.5 million.

 

Analysts note the hospitals most vulnerable to Medicaid cuts are:

  • Children’s hospitals
  • Safety net hospitals in urban areas

 

To read the Rand report, click here.

 

 

 

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Comments from Experts on Life Span of Value-Based Payment Models

Many questions have arisen about the future of the Affordable Care Act (ACA) since the election. From providers’ point of view, iProtean expert and Veralon Managing Director and CEO Dan Grauman noted the “repeal” of ACA probably will not eliminate alternative payment models (ACOs, bundled payments, etc.).

 

Grauman noted in a recent update that shifting to value-based care has bi-partisan support, compared to individual and employer mandates, exchanges, insurance industry regulations, Medicaid expansion and taxes to pay for these, the focus of the repeal efforts to date.

 

It would be difficult to undo some aspects of the ACA without disassembling the Medicare Access and CHIP Reauthorization Act (MACRA), which received bipartisan support. And the Center for Medicare & Medicaid Innovation (CMMI), created by the ACA and targeted for elimination by some Republican lawmakers, provided the advanced alternative payment models used by MACRA. (“Trump Victory Fires Speculation About Physician Pay Reform,” HFMA Weekly, November 11, 2016)

 

An executive from the American College of Physicians noted in a recent interview that without CMMI, the alternative payment side of MACRA wouldn’t work. He noted that MACRA “will keep driving healthcare transformation from volume- to value-based payments, regardless of efforts to undo the ACA. “Of all the things I could be concerned about, the movement to more value-based payment is not one that I see as under threat. They’re going to need to find cost savings without compromising quality. That’s a constant.” (“Trump Victory Fires Speculation About Physician Pay Reform,” HFMA Weekly, November 11, 2016)

 

However, the move toward physician practice consolidation could change, according to health policy experts. Changes could include easing the administrative and bureaucratic burdens physicians face, instituting medical liability reforms, and altering the movement toward value-based payments. (“Trump Victory Fires Speculation About Physician Pay Reform,” HFMA Weekly, November 11, 2016)

 

 

iProtean subscribers, the advanced Governance course, Governance in an Era of Population Health, featuring Jim Rice, Karma Bass and Marian Jennings is now in your library. These experts discuss the implications of population health management for governing boards, governing across boundaries and how to prepare for population health initiatives.

 

And coming soon, Driving a Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D.

 

 

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CMS Releases Estimates on Amount Available for Incentive Payments

CMS estimates that the hospital value-based purchasing program (VBP) will have approximately $1.8 billion dollars for value-based incentive payments for FY 2017 hospital discharges.

 

The incentive pool is funded by reducing the base operating Medicare Severity diagnosis-related group (MS-DRG) payment amounts that determine the Medicare payment for each hospital inpatient discharge. For fiscal year FY 2017, the applicable percent reduction rises from 1.75 to 2 percent of the base MS-DRG payment amounts for all participating hospitals. (CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017, CMS.gov, November 1, 2016)

 

This is the fifth year of the hospital VBP Program, affecting payment for inpatient stays in approximately 3,000 hospitals across the country. Hospitals’ payments depend on:

 

  • How well they performed – compared to their peers – on important healthcare quality and resource use measures during a performance period
  • How much they have improved the quality of care provided to patients over time

 

Hospitals either break even, receive more than they put into the pool, or see less than they contributed. (“More Than 1,600 Hospitals to See Positive Quality Adjustment in FY 2017, CMS Says,” HFMA Weekly, November 4, 2016)

 

The domains for the FY 2017 Hospital VBP Program and the weighting for these domains were:

 

  • Clinical Care—Outcomes (25 percent); Process (5 percent)
  • Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent)
  • Safety (20 percent)
  • Efficiency and Cost Reduction (25 percent)

 

“For FY 2017, more hospitals will have an increase in their base operating MS-DRG payments than will have a decrease. In total, over 1,600 hospitals will have a positive payment adjustment.” (CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017, CMS.gov, November 1, 2016)

 

For FY 2016, CMS reported last year that 1,800 hospitals would have a positive adjustment.

 

“For FY 2017, about half of hospitals will see a small change in their base operating MS-DRG payments (between -0.5 and 0.5 percent). After taking into account the statutorily mandated 2 percent withhold, the highest performing hospital in FY 2017 will receive a net increase in payments of slightly more than 4 percent, and the lowest performing hospital will incur a net reduction of 1.83 percent.” (CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017, CMS.gov, November 1, 2016)

 

 

iProtean subscribers, the advanced Governance course, Governance in an Era of Population Health, featuring Jim Rice, Karma Bass and Marian Jennings is now in your library. These experts discuss the implications of population health management for governing boards, governing across boundaries and how to prepare for population health initiatives.

 

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CMS Wants More Providers to Participate in Advanced APMs

CMS will reopen applications for new practices and payers in the Comprehensive Primary Care Plus (CPC+) model and for new participants in the Next Generation Accountable Care Organization (ACO) model for the 2018 performance year. Clinicians in the Oncology Care Model (OCM) with two-sided risk in 2017 will qualify as participants in an advanced alternative payment model (APM) under MACRA. MACRA allows clinicians to earn a 5 percent incentive payment if they sufficiently participate in an advanced APM. (“CMS Moves to Expand APM Enrollment, HFMA Weekly, October 28, 2016)

 

CMS recently made changes to MACRA, allowing clinicians to earn the APM bonus, while avoiding quality-reporting requirements otherwise required by MACRA’s Quality Improvement Program (QIP), if they join certain models for 2017. An abbreviated list appears below:

 

  • CPC+
  • Medicare Shared Savings Program (MSSP) Track 2
  • MSSP Track 3
  • Next Generation ACO Model
  • OCM with two-sided risk

 

Qualifying APMs will expand by 2018 to include these models:

 

  • MSSP ACO Track 1+
  • New voluntary bundled payment model
  • Comprehensive Care for Joint Replacement payment model (Certified Electronic Health Record Technology [CEHRT] track)
  • Advancing Care Coordination Through Episode Payment Models Track 1 (CEHRT track)

 

The lists of qualifying APMs are expected to continue to grow. According to DHHS Secretary Sylvia Mathews Burwell, clinicians will have a total of 10 models from the CMS Innovation Center to choose from as they transition from the QIP to APM track.

 

Announcing the APM expansion, Burwell noted the healthcare industry has “reached her goal of tying 30 percent of payments to APMs by the end of 2016.” HHS is now working toward shifting at least 50 percent of payments into APMs by the end of 2018.

She also said that beginning in 2019, MACRA will give providers credit for participating in Medicaid and commercial APMs. (“CMS Moves to Expand APM Enrollment, HFMA Weekly, October 28, 2016)

 

 

To read the CMS release, click here:

 

 

For more information, click here:

 

 

 

 

iProtean subscribers, the advanced Governance course, Governance in an Era of Population Health, featuring Jim Rice, Karma Bass and Marian Jennings is now in your library. These experts discuss the implications of population health management for governing boards, governing across boundaries and how to prepare for population health initiatives.

 

And coming soon, Driving a Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D.

 

 

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.