‘Everybody feels they have to redo or dust off their strategic plan’
Over the past decade, the top leadership of the nation’s hospitals formulated their business plans on the twin premises that more people would have comprehensive health insurance and that the reimbursement system was moving inexorably toward value-based payment. Modern Healthcare reporter Steven Ross Johnson recently asked American Hospital Association CEO Rick Pollack what impact the election will have on those basic assumptions. The following is an edited transcript.
Modern Healthcare: What do you believe are the greatest challenges for hospitals under a Trump administration?
Rick Pollack: As we begin a new administration and a new Congress and a whole new set of political dynamics, there’s obviously a lot of uncertainty. Uncertainty brings challenges about forecasting where things are going to be. Everybody in the field feels they have to redo or dust off their strategic plan given that uncertainty.
The other challenge, given the new political environment, is what is going to happen to the coverage expansions? As we see people examine the Affordable Care Act, we’ve got about 21 million folks who have been extended coverage under that law. That issue will be of great concern to us. How do we maintain coverage for those millions of Americans? That’s the challenge.
MH: Do you see any opportunities?
Pollack: In this new political environment, the whole issue of regulatory reform is something that becomes a priority to this administration. We share that priority. And the notion of trying to eliminate regulatory barriers that get in the way of clinical integration, the opportunity to eliminate the duplication of audit processes that our hospitals are subjected to. There are a lot of redundancies there.
We need flexibility in how we transition to meaningful use Stage 3 and flexibility in how we transition to the new physician payment system. There are also opportunities for reforms of how the process deals with antitrust. The Smarter Act (the Standard Merger and Acquisition Reviews Through Equal Rules Act that would harmonize the processes used by the U.S. Justice Department and the Federal Trade Commission for challenging mergers), which was passed by the Republican-controlled House, is something that we would hope would get more attention.
There’s opportunity in addressing drug pricing. President-elect Trump certainly said that was on his to-do list. On the issue of mental health legislation, we’ve got a bill that’s passed the House and is pending in the Senate, which offers an opportunity to get that done. And then I think there will also be opportunities in the whole arena of promoting innovation in terms of expanding opportunities for telehealth, promoting interoperability of electronic health records, developing new care models to serve vulnerable populations in communities that are experiencing economic problems, and training the next generation of caregivers.
MH: A growing number of hospitals in recent years have looked at addressing nonclinical social factors such as homelessness, poverty and food insecurity as a means of helping certain populations that have poor health outcomes. Where do you see such efforts going if the Affordable Care Act is repealed or radically changed?
Pollack: How do you provide new care models to allow hospitals to be leaders as an anchor of
“The movement from fee-for-service to fee-for-value—I don’t see that movement being curtailed. I don’t see that being repealed.”
“Hospitals, because of who we are and the role we play, are always going to be consulted.”
service or an access point in areas in which the area is really suffering and the hospital is really challenged? Hospitals need to look at new models.
When you look at the Affordable Care Act, there’s a portion of it that is obviously focused on extending coverage to the uninsured. That’s been the most controversial part. But there’s another focus in the ACA related to delivery system reform and the movement from fee-for-service to fee-for-value. I don’t see that movement being curtailed. I don’t see that being repealed.
As we move from fee-for-service to fee-for-value and new payment systems in which people are taking responsibility for attributed populations or people are taking responsibility for bundles of care, the issue of social determinants of health will still be out there and will still be important. Eighty percent of all healthcare spending is dictated by various social determinants of health. So the need to address that issue will remain.
MH: Hospitals are not getting paid for the costs of these services. Do you think the payment structure will acknowledge those efforts?
Pollack: Hospitals already do a lot of those types of things as part of their obligations for community benefit. We’ve got members that have set up grocery stores in food deserts and put cooking classes on the second floor in an effort to make sure that people don’t only have access to fresh foods, but also those that are suffering from things like diabetes or hypertension or obesity can actually learn for themselves how proper nutrition would work.
When it comes to payment, hospitals are taking more responsibility, whether it’s a bundle, whether it’s an accountable care organization, whether it’s becoming a health plan, whether it’s some other new model. We need risk adjustment. Payment needs to be built in a more refined way that takes into account the very different populations that we care for.
MH: When it comes to valuebased reimbursement, which programs are effective and which are not?
Pollack: The jury is still out in terms of effectiveness. Directionally, the whole notion of accountable care organizations and bundling has certainly been consistent with the notion of clinical integration and teamwork and coordinating care and putting the right incentives to keep people healthy. How has it played out on the ground? It’s been uneven because of problems associated with risk adjustment.
It’s also been uneven because of problems associated with the data being available to people in a timely way to really manage and coordinate the care. We’ve had some successes. We’ve had some people who have dropped out because it hasn’t been successful.
One of the key things we have to keep in mind during this period of enormous change is that we need a little bit of pacing. As soon as, for instance, we saw the Comprehensive Care for Joint Replacement bundling initiative come out, right on top of that we saw the cardiac bundling initiative come out, and this is in the midst of trying to get ready for the next stage of IT. And it’s in the midst of getting ready for MACRA implementation.
One of the issues here is the pace of change. Some of these initiatives have come too fast too soon, and some have been expanded and been made mandatory before we have proof that we know that it is, in fact, effective.
MH: How have hospitals fared financially in the shift away from fee-for-service?
Pollack: It’s hard to make a generalization around that. It varies across the country.
MH: What do you think of the new rules pertaining to CMS payment for services delivered at hospitals’ off-campus facilities?
Pollack: The proposed rule basically said that new outpatient facilities would receive no payment. The final rule provided payment to hospitals for those facility fees, albeit at the level that is provided to a physician office or an ambulatory-care clinic. We definitely made progress, but in our view hospital outpatient facilities do, in fact, deserve a higher payment rate.
We have a much higher level of regulatory accountability. We take care of any patient who walks through the door 24/7. We have seen research that has demonstrated that our patient mix is much sicker and more complicated than those that are seen in other settings.
So for us, this whole issue of site-neutral is very problematic and of concern. There are still statutory changes that need to take place that either the rule didn’t address or ignored.
MH: How are hospitals preparing for the possibility that they may see more uncompensated-care patients due to a loss of coverage?
Pollack: We’re in the top of the first inning in the game. We’ve already seen people begin to suggest that maybe there needs to be phase-ins; that we can’t just pull the plug on 21 million people. We certainly agree with that. It’s a very, very fluid situation. We don’t exactly know how this is going to play out. For our members, the key is making sure that the 21 or so million people who were extended coverage are still protected.
MH: Has hospitals’ role changed in light of Trump’s win?
Pollack: No. It’s the same. Hospitals are located in every single state and congressional district. We’re often the largest employer in the community. We are pillars of those communities, and we are key stakeholders.
I’ve been around long enough to go through many different changes in administrations and multiple efforts related to different reforms. Hospitals, because of who we are and the role we play, are always going to be consulted.