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With the GOP abandoning ACA repeal, what should HIT, hospital execs do now?

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The Senate GOP's decision this week to abandon a planned vote to repeal the Affordable Care Act has healthcare administrators and IT executives wondering how to prepare for next year and beyond. In this column, The Advisory Board’s Chas Roades, chief research officer, and John Johnston, a partner in the group’s consulting arm, offer their perspective. – Ed.

What would the Graham-Cassidy bill have meant for hospitals if it had passed—and what are its prospects of Republicans passing a similar bill at a later date?

Roades: I can't predict whether Republicans will eventually pass Graham-Cassidy or another ACA repeal bill, but it does seem like they'll keep trying. Sen. Lindsay Graham (R-SC) on Tuesday certainly didn't sound ready to give up—he said that passing Graham-Cassidy was a matter of "not if, but when." Most experts are more dubious.

If Graham-Cassidy had passed, it would have had major ramifications for providers. Most significantly, it would have eliminated Medicaid expansion, which has been a boon to hospital margins in expansion states, and it would have instituted per capita caps that cut federal Medicaid funding over time. All told, CBO projected federal Medicaid spending would fall by $1 trillion through 2026 under Graham-Cassidy.

But no matter what happens with Graham-Cassidy or any other ACA repeal—hospitals and health systems need to pursue four no-regrets strategies.

  • Be much more proactive in developing an effective safety net strategy by collaborating with state Medicaid agencies, doubling down on population health efforts, and investing in care coordination and insurance navigation resources.
  • Redouble efforts to reduce costs by improving revenue cycle performance and focusing on both near-term savings and long-term cost restructuring.
  • Develop a consumer strategy that delivers on what patients value by improving access, offering more affordable pricing and driving patient loyalty over time.
  • Create an intentional Medicare risk strategy to continue adapting to the intractably changing payment and delivery system landscape.

What have these past few months been like for hospital executives, with all the uncertainty about the ACA, and what are you urging them to focus on now?

Johnston: In general, hospital executives with whom I've spoken have recognized there's uncertainty around the ACA and Medicaid and have been keeping an eye on what's going on in Washington—but they're facing some major challenges that will require big strategic shifts no matter what happens.

Organizations are really concerned about their cost structures, and some are talking about dramatic cuts—in the hundreds of millions of dollars. Even though most hospitals and health systems are profitable now, they're anticipating margins getting even tighter. Over the past couple years, commercial payers have cut their rates pretty dramatically, and Medicare and commercial payers are making very frequent changes in what they will pay and how they will reimburse for certain things.

When it comes to how hospitals and health systems respond to those pressures, cost reduction today is very different than when the ACA really came to be. In the past, it was more about trimming budgets. Now, because of readmissions penalties, reimbursement cuts and more hospitals taking on risk, it's much more focused on tackling all the inefficiencies tied up in care delivery. And the Trump administration might change the pace of the shift to value-based care and what the programs look like, but it is clear shifting risk to providers is here to stay overall.

Implementing initiatives to reduce the cost of an episode of care and improve outcomes is going to bear fruit for hospitals in any scenario. You really need to be zeroing in on the five to 10 patient populations that are going to make or break performance and determining how to best partner with all their stakeholders—the medical staff, the post-acute providers, their clinically integrated networks—to see how they can create predictable, competitive costs and drive quality.

Banner Health is an organization we've worked with that has brought their medical staff to the table in a big way to get them to take on ownership of this. University of Pennsylvania recently partnered with us to really zero in on an issue like post-acute care with their patient populations. LifePoint has taken very specific steps to embed quality, financial performance and physician engagement in their communities across the country.

In addition to what might happen next with ACA repeal, what else should providers be paying attention to now in the policy world?

Roades: On the ACA, it will be interesting to see if there's any momentum for bipartisan legislation to strengthen the insurance exchanges or if it'll continue to be a really partisan healthcare climate. There are some really important deadlines coming up for Congress—on September 30, authorization for CHIP expires, and $43 billion in DSH payment cuts will kick in if lawmakers don't take action before then.

On Medicare, CMS administrator Seema Verma last week in a Wall Street Journal op-ed said value-based care is here to stay but that the agency wants to "increase flexibility" and hear from healthcare organizations about which CMMI models should and shouldn't continue. Programs like ACOs and voluntary bundles are likely to continue, but I think it's pretty clear that that this administration is looking to reshuffle the priority list a bit—overall, we'll see more time spent on innovations in Medicare Advantage, solutions to drive forward consumerism and market-based frameworks, and efforts to decrease the administrative complexity of the Medicare program, especially for physician practices.

Finally, on Medicaid, the Trump administration has signaled a willingness to implement some state waiver ideas that were previously rejected by the Obama administration, including work requirements and more cost sharing. States can use federal waivers to experiment with consumer-driven insurance designs or to implement delivery system reforms in Medicaid. Lots of those waivers are pending now, but I think we'll continue to see reforms to Medicaid even in the absence of large-scale funding cuts.

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