Part I: How We Got Here: President Obama to Obamacare to President-elect Trump

One thing that has become clear since the election of Donald Trump last week is that efforts to repeal or amend the Affordable Care Act (ACA) will be a high priority legislative item for next year’s Congress and the incoming Administration. But to have a better grasp of what the future of health care might look like under the Trump Administration, it is important to understand how the current healthcare landscape came to be. This first post in our blog series, Very Opaque to Slightly Transparent: Shedding Light on the Future of Healthcare, takes us on a brief stroll down memory lane of how and why the ACA became enacted, and how it has helped lead to the developments and trends we have seen in the healthcare industry.

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Very Opaque to Slightly Transparent: Shedding Light on the Future of Healthcare

In a November 14, 2016 Forbes article entitled, “Under Trump, Americans Can Finally Put ObamaCare Behind Us,” Sally Pipes wrote, “ObamaCare in a full-on ‘death spiral,’ voters were clearly in no mood for Clinton’s plan to ‘build on’ the president’s healthcare law. Instead, they chose a president who has said that his first order of business following President Trump’s inauguration on January 20, will be to ‘ask Congress to immediately deliver a full repeal of ObamaCare.’”  Notwithstanding Ms. Pipes confidence in a full repeal, in a Wall Street Journal article dated November 11, 2016, “Donald Trump, in Exclusive Interview, Tells WSJ He Is Willing to Keep Parts of Obama Health Law” by Monica Langley and Gerard Baker, Mr. President-elect Donald Trump said that he favors keeping the ObamaCare provisions which prohibit insurers from denying coverage because of existing conditions and which allows parents to provide additional years of  coverage for children on their insurance policies.  “I like those very much,” Mr. Trump is reported as saying.

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“May You Live in Interesting Times” – Some Healthcare Predictions for the Trump Administration’s First Year

The ancient Chinese curse – “May you live in interesting times” – certainly springs to mind these days.  What does the election of Donald Trump mean for the healthcare industry, the Affordable Care Act (ACA) and current healthcare market trends?  Let’s take a quick look at the likely effects of the election, but first let’s set the stage:

Background Data:

  • Per a July 2016 federal Department of Health and Human Services study, it is estimated that 18% of 2016 personal income in aggregate will be spent on healthcare, with 5% of the population accounting for nearly half of the estimated $3.3 trillion 2016 healthcare spending and 50% of the population spending less than $3,000 each.
  • The healthcare cost reduction effect of the Great Recession has dissipated, with an anticipated healthcare cost increase of over 5% per year projected through 2025. The economic drag on the U.S. economy of healthcare spending has returned to almost pre-recession levels, and accountable care organization (ACO) savings to date have been relatively nominal.
  • Once aged in, Medicare will have over 70 million Baby Boomer generation seniors to care for…and with rising life expectancy comes greater lifetime healthcare costs.
  • The United States will have a shortfall of doctors before 2025, with a significant primary care shortfall expected, a significant shortage of doctors available who accept Medicaid and the U.S. ranked as the 24th of 28 countries by the number of doctors per thousand people among the Organization for Economic Development countries.
  • 20 million people were afforded insurance under ACA programs, including over 9 – 11 million (varies depending on source studies) in 2016 through the insurance exchanges and the remainder through Medicaid expansion in 32 states (as of September 2016).
  • Approximately 73 million Americans were covered by Medicaid or CHIP. Federal subsidies for Medicaid expansion are to trend downwards to 90% by 2020.  A growing number of states are moving toward managed Medicaid programs in an effort to contain costs that, in some instances, previously threatened to bankrupt state budgets in the absence of further tax increases.

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A Stick to Balance the Carrot: ONC Finalizes a New Framework to Address Non-Conformities in Certified Health Information Technology

The Office of the National Coordinator for Health Information Technology (ONC) has released a final rule (Final Rule) introducing a new regulatory framework for certified health information technology (Health IT). The use of certified Health IT—specifically, electronic health record (EHR) modules—has played a central role in the EHR Incentive Programs and is intimately linked to the accrual of points in MACRA’s Merit-based Incentive Payment System. A major component of the Final Rule allows for ONC’s direct review of products certified by ONC’s Health IT Certification Program (Program) and identifies the roles of both developers and the ONC in addressing Program-compliance issues.[1] The Final Rule impacts developers of certified Health IT (Health IT Developers), providers that utilize and rely on such certified Health IT, and ancillary developers and service providers whose businesses are linked to EHR technology.

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House Republicans Push Back on Medicare’s New Mandatory Bundled Payment Models

On July 25, 2016, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule that promises to deliver coordinated, high-quality care for Medicare beneficiaries. The proposed rule (effective July 1, 2017) establishes a mandatory bundled payment program for cardiac care and expands the existing hip and knee bundled payment initiative that launched earlier this year.

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The MACRA Final Rule: The Art of the Transition

On Friday, October 14, 2016, CMS released the much-anticipated final rule (the “Final Rule”) implementing the Quality Payment Program (QPP), mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  Pursuant to MACRA and the Final Rule, most clinicians will be required to participate in either a new Merit-based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (Advanced APM).  The Final Rule’s provisions are set to go into effect on January 1, 2017.  CMS will consider comments on the Final Rule submitted within 60 days of its publication (December 13, 2016).

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Vermont to Launch a First-in-the-Nation All-Payer System for All Healthcare Providers

As recently reported by Modern Healthcare and other major healthcare news outlets, the Obama administration has granted tentative approval for Vermont to establish an all-payer reimbursement system. If granted final approval, the Vermont All Payer Accountable Care Organization Model (Model) would be effective for five years from January 1, 2017 to December 31, 2022. The Model would be the first in the nation to cover all healthcare providers. By way of contrast, Maryland’s well-known all-payer system only covers hospitals.

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CMS says to physicians: Pick your pace for MACRA implementation. Physicians say to CMS: Thank you for hearing us.

On April 27, 2016, the Centers for Medicare & Medicaid Services (CMS) issued proposed regulations (Proposed Regs.) as a first step in the implementation of the Quality Payment Program (QPP) provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  In response to public comments regarding the Proposed Regs., CMS announced on September 8, 2016 (QPP Notice) that the final QPP regulations which CMS intends to issue in November, 2016 will allow physicians to “pick their pace” of QPP participation for the first MACRA performance period beginning on January 1, 2017.

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CMS Releases 2017 Medicare Hospital Payment Rates, Penalties for Poor Performers

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (Final Rule) modifying the Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year (FY) 2017. CMS pays acute-care hospitals for services provided to Medicare beneficiaries under the IPPS and pays long-term care hospitals (e.g. hospices, nursing homes) under the LTCH PPS. For FY 2017, CMS projects that the Final Rule’s provisions will increase total Medicare spending for acute care hospital services by $746 million. In contrast, payments to long-term care hospital services are expected to decrease by $363 million, or 7.1 percent. According to CMS, the adjusted payments demonstrate an ongoing effort to move the Medicare program away from volume-based payments and toward a pay-for performance (value-based) reimbursement methodology as supported by a pay-for-reporting program.

The Final Rule, which goes into effect October 1, 2016, will affect an estimated 3,330 acute care hospitals and 430 LTCHs.

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