What’s the Worst That Could Happen?Contingency Planning in a Time of Health Market Changes

March 22, 2017

Session Topics

• Introduction: What would be the worst that could happen if the Affordable Care Act (ACA) were to be repealed with no replacement?

• The Potential Impact of Repeal

– Enrollment levels and the uninsured

– Economic/employment impact

– Rural/urban comparative impact

• What the ACA Does : What could be repealed

– Private Market

– Medicaid

– Medicare

• Other Proposed Changes: The potential impact of other proposed market changes.

• Contingency Planning : What can SORHs do ?

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Change in Uninsured Population Under 65

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Difference Number of

Uninsured 2013-4

Uninsured Population

Under 65 - 2013PCT Change

All 8,463,332 44,477,970 19.0%

Rural 1,180,333 6,477,804 18.2%

Urban 7,282,999 38,000,166 19.2%

Medicaid Expansion 5,337,536 21,414,499 24.9%

No Expansion 3,125,796 23,063,471 13.6%

Change in Uninsured Population Under 65

States Ranked - 2013-2014

TX 719,557 5,695,879 12.60%

OK 82,601 659,369 12.50%

LA 84,563 746,374 11.30%

AL 70,402 637,841 11.00%

VA 107,029 971,264 11.00%

MO 80,423 762,811 10.50%

WY 8,184 77,766 10.50%

AK 12,153 135,757 9.00%

SD 7,726 89,295 8.70%

ME 12,101 143,651 8.40%

UT 33,060 393,334 8.40%

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Change in Rural Uninsured Population Under 65

States Ranked - 2013-2014

StateDifference Rural Number of

Uninsured 2013-4

Rural Uninsured Population Under

65 - 2013PCT Change

KY 276,139 118,457 42.90%

WV 102,899 39,624 38.50%

OR 99,446 33,164 33.30%

WA 110,251 34,746 31.50%

VT 29,883 9,096 30.40%

CT 14,952 4,495 30.10%

AR 182,325 53,894 29.60%

HI 22,059 6,526 29.60%

CA 125,290 36,960 29.50%

CO 115,426 32,589 28.20%

VA 137,538 14,182 10.30%

OK 239,079 24,478 10.20%

ME 64,894 6,402 9.90%

AK 52,619 4,144 7.90%

MO 219,370 15,905 7.30%

SD 49,942 3,207 6.40%

UT 47,005 1,834 3.90%

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Change in Uninsured Population Under 65

Expansion and Non-Expansion States - 2013-2014

StateDifference Number of

Uninsured 2013-4

Uninsured Population Under 65 -

2013PCT Change

KY 255,088 615,363 41.50%

WV 98,184 254,261 38.60%

RI 44,760 118,849 37.70%

WA 310,352 940,952 33.00%

OR 181,245 560,102 32.40%

VT 13,251 43,638 30.40%

MN 124,838 433,829 28.80%

CA 1,713,194 6,368,296 26.90%

AR 122,161 458,780 26.60%

CT 85,924 322,785 26.60%

StateDifference Number of

Uninsured 2013-4

Uninsured Population Under 65 -

2013PCT Change

WI 97,844 505,462 19.40%

KS 56,906 341,248 16.70%

FL 602,677 3,778,848 15.90%

MT 26,416 166,184 15.90%

NC 236,941 1,491,079 15.90%

ID 40,029 256,305 15.60%

MS 74,158 498,591 14.90%

GA 261,320 1,810,621 14.40%

NE 28,457 201,766 14.10%

IN 118,871 887,375 13.40%

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Sample State Profile

Change in Uninsured Population Under 65

-- Washington Counties 2013-4

CountyPopulation Under 65 -

Uninsured - 2013

Difference Number

Uninsured 2013-2014

PCT 2013 Uninsured With

Coverage in 2014Rural - Urban

Garfield County 265 119 44.9 RURAL

Spokane County 66,107 27,621 41.8 URBAN

Jefferson County 3,713 1,512 40.7 RURAL

Whitman County 5,747 2,331 40.6 RURAL

Kitsap County 28,238 11,161 39.5 URBAN

Wahkiakum County 547 205 37.5 RURAL

Chelan County 12,893 4,760 36.9 URBAN

Kittitas County 6,549 2,387 36.4 RURAL

Whatcom County 31,882 11,558 36.3 URBAN

Skamania County 1,470 524 35.6 URBAN

King County 241,577 85,763 35.5 URBAN

Grays Harbor County 12,213 4,293 35.2 RURAL

Cowlitz County 14,253 4,939 34.7 URBAN

Lincoln County 1,226 422 34.4 RURAL

San Juan County 2,513 858 34.1 RURAL

Mason County 9,222 3,145 34.1 RURAL

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Estimated Coverage Impact in Washington

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Projected Economic Impact – Partial ACA Repeal

Source: Commonwealth Fund – January 20179

Key Areas of ACA Provisions

Private Market Provisions

Medicaid Provisions

Medicare Provisions

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Key ACA Private Market Provisions - 1

• Establishes Coverage Mandates: creates health coverage purchase requirements.

– Individual mandates.

– Employer mandates.

• Creates Purchaser Subsidies:

– Premium tax credits for low and moderate income purchasers.

– Cost-sharing reductions for Silver plans for low and moderate income purchasers.

– Small business assistance program.

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Key ACA Private Market Provisions - 2

• Creates Marketplaces/Exchanges: Creates Individual/family and Small Business Health Options Program (SHOP) marketplaces for Qualified Health Plans (QHPs).

– State operated exchanges.

– Federally-facilitated exchanges.

– Hybrid exchanges.

• Sets QHP Standards:

– Essential QHP Benefits.

– Metal levels: including coverage, deduction limits and maximum out of pocket limits.

– Age Bands: sets premium ratios allowed for key age cohorts.

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Key ACA Private Market Provisions - 3

• Sets Nationwide QHP Operating Requirements:

– Pre-existing conditions.

– Coverage on parents’ plans for 26 and under.

– Loss ratios.

– Network adequacy.

– Essential community providers.

– Behavioral health parity.

• Requires Federal Approval of QHP Offerings.

• Establishes Insurer Risk Reduction and Stabilization Measures.

• State Demonstrations: Creates opportunity for state demonstrations.

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Key ACA Medicaid Provisions

• Permits Medicaid Expansion: Permits, at state option, expansion of Medicaid eligibility to, among others, adults in higher income categories.

• Provides Enhanced Federal Support: Provides higher Federal matching for Medicaid expansions.

• Permits Expanded State Waivers: Provides expanded opportunity for state waivers for Medicaid expansion enrollees.

– Private option

– Cost-sharing

– [Training/Work requirements]

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Key ACA Medicare Provisions

• Modifies Previous Payment Programs: Eliminates/reduces previous Medicare special payment arrangements.

– Disproportionate Share Hospitals (DSH)/SCH

– Home Health

• Creates Performance Payment Incentives: Establishes Medicare performance payment adjustments.

– Hospital Readmission Reduction

– Hospital Acquired Condition

– Value-Based Purchasing

– Provider Quality Adjustments [PQRS-MACRA-MIPS-Meaningful Use]

– Primary Care Incentive Payment

• Creates Alternative Payment Methodologies: Creates Medicare alternative payment demonstrations.

– Accountable Care Organizations (ACOs)

– Other Alternative Payment Methodologies (APMs)

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Would Repeal Be a Pre-ACA Reset?

• It depends.

• Would repeal be a true reset or will it be limited to private market provisions?

– Private Coverage mandates.

– Marketplace and QHP requirements.

– Purchaser subsidies.

– High risk pool elimination.

• Would it rescind Medicare operational changes?

– Will it roll back payment reductions?

• DSH

• SCH

• Home health.16

Pre-ACA Reset Considerations: 2

– Will it repeal Medicare performance/quality payment modifiers ?

• Hospital.

• Physician.

– Will it repeal mandated costs?

• Meaningful use.

• MACRA/MIPS/PQRS.

• Hospital Compare.

• Will it repeal Medicaid expansion?

– Will current Medicaid expansion be continued?

– Will additional states be permitted to expand Medicaid?

– Will FMAP for expanded Medicaid be continued at current rate or ratcheted back to basic Medicaid FMAP rates?

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Pre-ACA Reset Considerations: 3

– Will State waivers be expanded?

• Will they expand the private option – with or without state marketplaces?

– Would it work if state marketplaces are eliminated?

– Will it meet Medicaid standards if plan benefit requirements are eliminated?

• Will they permit enrollee training/work requirements?

• Will they eliminate PPS and other special reimbursement rates?

• Will they permit enhanced enrollee cost-sharing?

– Will there be block granting or per capita caps applied to Medicaid expansion programs?

• Will it make supplemental, non ACA modifications, to the health market?

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Other Potential Changes to the Health Care Market

• Medicaid Block Granting / Per Capita Caps.

• Privatization of Medicare – Capped Benefit.

• Re-establish state high risk pools.

• Expand health savings accounts.

• Expand interstate availability of plans.

• Regulate medical liability.

• Modify MACRA and PQRS.

• Modify Hospital Star Rating.

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ACA Repeal: What’s the bottom line?

• Fewer people will be insured.

– Medicaid Enrollment Reductions.

• Medicaid expansion rollbacks.

• Basic Medicaid rollbacks under waivers and block granting.

– Private Insurance Enrollment Reductions.

• Individual/family and employer mandate eliminated.

• Premiums will have no/low subsidies and will rise, making plans less affordable.

• Cost-sharing subsidy of Silver plans will be eliminated, making plans less attractive.

• Plans will cover less, making plans less appealing.

– Impact: Greater demand of charity/sliding fee care and higher levels of uncompensated care.

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What’s the bottom line? - 2

• More people will be underinsured – have poorer coverage.

– Private insurance with fewer standards:

• Increase in limited benefit plans.

• Increase in high deductible plans with few pre-deductible benefits.

• Increase in plans with substantial cost-sharing.

– Private option Medicaid.

– Impact:

• Many individuals will delay care, arriving at health services when they are sicker. This will increase the time needed to provide care and may impact clinical and health outcomes.

• Many individuals, particularly the uninsured and underinsured, will be more sparing in their use of health services. This will reduce overall demand and will make follow-up care more difficult.

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What’s the bottom line? - 3

• Fewer private market offerings.– Fewer insurers will be in the marketplace offering fewer plans

because incentives and guarantees will be removed.– Impact: Insurance deserts and lack of competitive marketplaces,

particularly in rural areas. • Narrower provider networks.

– Removal/reduction of requirements will make network adequacy poorer with no rural or Essential Community Provider guarantees.

– Impact: Poorer access of insured individuals/families to key services in rural and underserved areas.

• More limits to covered services.– Fewer services, including preventive care, will be required as low-

cost parts of plans. – Behavioral health parity eliminated.– Impact: Increase in uncovered services for insured patients.

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What are the major challenges for the rural health system with ACA repeal?

• Maintaining financial stability of rural health organizations.

• Adjusting staffing capacity to meet varying demand.

• Adjusting facility/equipment investment to meet varying demand.

• Modifying policy/program to respond to the needs of the uninsured/underinsured.

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How to Respond to ACA Repeal

• This is not an adequate answer.

• Instead, support contingency planning in rural health :

– Anticipate changes.

– Anticipate impact.

– Monitor impact.

– Respond appropriately.

• Regressing to pre-ACA operations may be an okay starting point, but we must recognize that things have changed

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Focal Points for Monitoring and Response

Contract and Mandate

Considerations

Operational Considerations

Outcome/Impact Considerations

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Monitoring: Outcome Factors

• Revenue: What change is there in the revenue of rural organizations? This includes any change in overall revenue and revenue by payor and plan. It includes any change in revenue by service type. It also includes change in average revenue by patient of different type.

• Costs: What change is there in the cost of operations for rural organizations. This includes any change in overall and average cost and by service type and patient type. It includes change by payor and plan. Of particular importance is change in uncompensated care and bad debt.

• Profitability/Net Revenue: What change is there in the rural organization’s financial position. This includes change in profitability patient and service type. It also includes changes by payor and plan.

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Outcome Factors - 2

• Clinical Outcome: What change is there in the clinical outcome of organization services?

• Patient Health Improvement: What change is there in the health status of organization patients?

• Community Benefit/Community Health: What change is there in the overall health of the community?

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Monitoring: Operational Factors

• Patient Mix: What change is there in the mix of patients being seen? Monitoring can examine changes in patient mix by coverage, demographics, diagnosis, or other appropriate category.

• Utilization/Volume: What change is there in the level of utilization by patients? Monitoring can examine the overall volume of utilization or the rate of utilization by different patient groups.

• Productivity/Efficiency: What change is there in the productivity and efficiency of staff? Are there associated changes in patient diagnosis acuity and average visit length?

• Clinical Quality Measures: What change is there in clinical quality measures?

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Monitoring: Contract and Mandate Factors

• Insurance/Payor Environment:

– Insurers: What change is there in insurers/managed care organizations operating in your area?

– Plans/Rates: What change is there in the range of plans offered? What change is there in the reimbursement rates?

– Premiums/Subsidies: What change is there in the premium level for plans offered and the subsidy provided for consumers.?

– Benefits: What change is there in the extent of plan coverage and requirements for cost-sharing?

– APM: What new opportunities for alternative payment methodologies are offered?

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Contract and Mandate Factors - 2

• Performance/Payment Programs

– What change is there in performance/operational requirements and associated penalties/incentives?

• Meaningful use

• Provider Quality/Performance

• Hospital Quality/Performance

• Primary Care Incentive Program

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Responding to Changes

• Sustainability: Make changes to assure sustainable operations under changing market conditions. This includes changes in:

– Staffing

– Facility/Equipment investment

– Service Mix

– Fee Schedule

• Operations Improvement: Re-engineer operations to improve efficiency and maintain/improve service quality.

• Uncompensated Care: Make changes in policy and program to adjust to increases in uninsured/underinsured. Engage in collaborative efforts to address these needs.

• Insurer participation: Maximize feasible participation with changing environment of insurers/plans.

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Strategic Questions for SORHS

• What do rural communities need to transition successfully to the new health services environment?

• What do rural health service providers need to transition successfully to the new health services environment?

• What is the role of the SORH in helping rural communities and rural health service providers transition to the new health services environment?

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Additional Resources - 1

• Commonwealth Fund, Repealing Federal Health Reform: Economic and Employment Consequences for States, January 2017

– http://www.commonwealthfund.org/publications/issue-briefs/2017/jan/repealing-federal-health-reform

• Urban Institute, Partial Repeal of the ACA through Reconciliation: Coverage Implications for Your State, January 2017

– http://www.urban.org/policy-centers/health-policy-center/projects/partial-repeal-aca-through-reconciliation

• US Census Bureau, Small Area Health Insurance Estimates, February 2017.

– http://www.census.gov/did/www/sahie/data/interactive/sahie.html

• Kaiser Family Foundation, Compare Proposals to Replace The Affordable Care Act, February 2017.

• http://kff.org/interactive/proposals-to-replace-the-affordable-care-act/

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Additional Resources - 2

• Rosenbaum et al., What Would Block Grants or Limits on Per Capita Spending Mean for Medicaid?, Commonwealth Fund, November 2016.

– http://www.commonwealthfund.org/publications/issue-briefs/2016/nov/medicaid-block-grants

• Talking Points Memo, Your Road Map To Paul Ryan's Plan To Privatize Medicare, December 2016.

– http://talkingpointsmemo.com/dc/your-road-map-to-paul-ryan-s-plan-to-privatize-medicare

• State Data Resources:

– Urban Institute State Profiles: http://bit.ly/2nJVo24

– Commonwealth Fund State Factsheets – ACA Economic Impact: http://bit.ly/2nJVw1F

– County Health Coverage Changes – State Profiles: http://bit.ly/2mM5Zsh

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