Re­lieved hos­pi­tal ex­ecs say rul­ing could speed Med­i­caid ex­pan­sion

Modern Healthcare - - NEWS - By Beth Kutscher and Steven Ross John­son

Hos­pi­tal lead­ers say they’re mov­ing ahead with de­liv­ery-sys­tem re­forms that keep their pop­u­la­tions healthy now that the U.S. Supreme Court has re­moved un­cer­tainty about the con­tin­u­a­tion of pre­mium sub­si­dies. They hope the sub­si­dies rul­ing will clear the way for more states to ex­pand Med­i­caid to low-in­come adults.

Healthcare in­vestors also cheered the King v. Bur­well de­ci­sion, send­ing shares of com­pa­nies such as Com­mu­nity Health Sys­tems and Tenet Healthcare Corp. as much as 14% higher on the day that the court is­sued its opin­ion.

“It’s very pos­i­tive for the in­dus­try,” said Alan Miller, CEO of Uni­ver­sal Health Ser­vices, a pub­licly traded chain with acute-care and be­hav­ioral­health hos­pi­tals in 37 states. “It’s good for re­duc­tion in bad debt. We’ll get paid for our ser­vices.”

The court’s de­ci­sion in King means that in­sur­ance will re­main af­ford­able for 6.4 mil­lion Amer­i­cans in 34 states and that hos­pi­tals will have a pay­ment source for many pre­vi­ously unin­sured pa­tients. Some healthcare lead­ers pre­dicted the rul­ing would weaken Repub­li­can ef­forts to roll back the Af­ford­able Care Act. If the court had killed the sub­si­dies, they say, it would have strength­ened fur­ther at­tacks on the law.

“A neg­a­tive rul­ing would have been very dis­rup­tive,” said Dr. Bruce Van­der­hoff, chief med­i­cal of­fi­cer of Ohio-Health, Colum­bus. “It would have been a lot like pulling a thread in a gar­ment. You just don’t know what will hap­pen if you pull that thread.”

In Ohio, 234,000 peo­ple bought health in­sur­ance through the fed­eral ex­change and 196,000 of them got a sub­sidy. “The court’s rul­ing al­lows for sta­bil­ity,” Van­der­hoff said. “What it sig­nals is a con­tin­ued evo­lu­tion to val­ue­based care rather than fits and starts.”

Trin­ity Health, based in Livo­nia, Mich., es­ti­mates that 3.8 mil­lion peo­ple were at risk of los­ing cov­er­age in the 21 states where it op­er­ates. Trin­ity has an am­bi­tious plan to ex­pand into new value-based pay­ment mod­els. In 2013, the sys­tem hired Dr. Richard Gil­fil­lan, the Obama ad­min­is­tra­tion’s ar­chi­tect of ac­count­able care or­ga­ni­za­tions, as its new CEO.

“The No. 1 im­pact (of the King rul­ing) for us is that those peo­ple who want to get care can con­tinue get­ting care,” said Gil­fil­lan, who for­merly headed the CMS In­no­va­tion Cen­ter, which was cre­ated by the healthcare re­form law. “It main­tains mo­men­tum around trans­form­ing our healthcare sys­tem.”

At health sys­tems across the coun­try, ex­ec­u­tives em­pha­sized that the rul­ing will al­low them to fo­cus on pro­vid­ing peo­ple with ur­gent and pre­ven­tive care be­fore they end up in the emer­gency room or the hos­pi­tal. “It’s crit­i­cally im­por­tant to pop­u­la­tion health,” said Bill Car­pen­ter, CEO of pub­licly traded LifePoint Health, based in Brent­wood, Tenn. Most of its 64 hos­pi­tals are small, ru­ral fa­cil­i­ties. “We are grate­ful that those peo­ple who bought af­ford­able health in­sur­ance through ex­changes will con­tinue to have cov­er­age.”

In Texas, the unin­sured rate has fallen to 16.9% from 24.6% since the ACA cov­er­age ex­pan­sion took ef­fect, de­spite the state’s re­fusal to ex­pand Med­i­caid to low-in­come adults. “For each 1% of our busi­ness that moves from be­ing unin­sured to be­ing in­sured via the mar­ket­place, we re­al­ize ap­prox­i­mately $40 mil­lion,” said Joel Al­li­son, CEO of Bay­lor Scott & White Health in Dal­las. “That is money that we, as Texas’ largest not-for-profit healthcare provider, can rein­vest in the health of the com­mu­ni­ties we serve, ex­pand­ing ac­cess to qual­ity care for the unin­sured and the un­der­in­sured.”

No­tably, the jus­tices not only up­held the Obama ad­min­is­tra­tion’s in­ter­pre­ta­tion that the ACA un­am­bigu­ously au­tho­rizes pre­mium sub­si­dies in all states, but they blocked fu­ture ad­min­is­tra­tions from in­ter­pret­ing the law dif­fer­ently and shut­ting off sub­si­dies in states served by the fed­eral mar­ket­place.

Public health ad­vo­cates and safety net providers say the King rul­ing was vi­tal in en­sur­ing healthcare ac­cess to the most vul­ner­a­ble pa­tients. “In non-ex­pan­sion states it would have been a triple whammy,” said John Hau­pert, CEO of Grady Health Sys­tem in At­lanta, whose state has not ex­panded Med­i­caid. “We would have had to start hav­ing dis­cus­sions with our board and the com­mu­nity about which clin­i­cal ser­vices we could no longer” af­ford to pro­vide with those kinds of cuts.

The King de­ci­sion is likely to pre­clude fu­ture le­gal chal­lenges to the healthcare re­form law and take the healthcare pres­sure off the 2016 elec­tions, said Fletcher Lance, na­tional healthcare prac­tice leader for con­sult­ing firm North High­land Co., who worked with hos­pi­tal com­pa­nies on plan­ning for var­i­ous sce­nar­ios prior to the rul­ing. For Repub­li­cans who want to re­peal or roll back the healthcare re­form law, “It be­comes po­lit­i­cally riskier to do that now,” he said. “The die is clearly cast.”

Be­yond that, Lance said, more states may move to ex­pand Med­i­caid to low­in­come adults un­der the ACA. In addi--

“There is strong cor­re­la­tion be­tween some of the worst health out­comes in the na­tion and the lack of Med­i­caid cov­er­age.’’ GE­ORGES BEN­JAMIN AMER­I­CAN PUBLIC HEALTH AS­SO­CI­A­TION

tion, more unin­sured peo­ple are likely to sign up for ex­change cov­er­age now that the court has re­moved un­cer­tainty about the le­gal­ity of the sub­si­dies.

Dr. Ge­orges Ben­jamin, ex­ec­u­tive di­rec­tor of the Amer­i­can Public Health As­so­ci­a­tion, said that much more fo­cus must now be given to ex­pand­ing Med­i­caid in all states, and that healthcare lead­ers need to high­light the neg­a­tive health and eco­nomic ef­fects of not ex­pand­ing. “There is strong cor­re­la­tion be­tween some of the worse health out­comes in the na­tion and the lack of Med­i­caid cov­er­age,” he said.

Ben­jamin said the King v. Bur­well case has helped spark what he called a “na­tional con­ver­sa­tion around health,” which he ex­pected will put pres­sure on law­mak­ers to pro­vide greater health- care ac­cess to more Amer­i­cans. “I be­lieve the public is go­ing to see through the lies and dis­tor­tions against the Af­ford­able Care Act and be­gin to de­mand their elected of­fi­cials do some­thing to cover peo­ple who are unin­sured,” he said.

Still, healthcare lead­ers in states that have not ex­panded Med­i­caid said it’s dif­fi­cult to pre­dict what Repub­li­can gover­nors and leg­isla­tive lead­ers will do. “That de­bate will con­tinue,” said Jim Nathan, CEO of three-hos­pi­tal Lee Me­mo­rial Health Sys­tem, Fort My­ers, Fla. That state just went through a huge bat­tle over Med­i­caid ex­pan­sion, split­ting the state’s Repub­li­can lead­ers and end­ing in de­feat for hos­pi­tals and busi­ness groups ad­vo­cat­ing Med­i­caid ex­pan­sion.

Lee Me­mo­rial’s south­west­ern Florida base has the sec­ond-high­est num­ber of unin­sured peo­ple among the state’s re­gions. Many peo­ple who had ser­vice jobs lost their job-based cov­er­age when the econ­omy tanked sev­eral years ago, and the hos­pi­tal sys­tem’s share of pa­tients with pri­vate in­sur­ance plum­meted from 35% to 20%.

Un­der Oba­macare, 1.3 mil­lion Florid­i­ans pur­chased cov­er­age through the fed­eral ex­change, with a large ma­jor­ity re­ceiv­ing pre­mium sub­si­dies. Be­cause of the ACA’s cov­er­age ex­pan­sion last year, “We saw a lev­el­ing off in the de­cline in com­mer­cial in­sur­ance,” Nathan said. “That’s a pos­i­tive for us.”

His re­lief over the King rul­ing was pal­pa­ble. “We were about ready to lose that,” he said.

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