Has the ACA Been Trumped? Only Half Way

Authored by PYA Principal Martie Ross, this is the first of many future key communications PYA will publish to help clear the fog and illuminate focal points for mobilization.  Martie’s expert insights draw upon a two-decade career as a practicing healthcare transactional and regulatory attorney, before becoming a trusted PYA healthcare business advisor specializing in new payment and delivery systems and public payer initiatives.  She is an oft-in-demand speaker and industry thought leader.

Presidential candidate Donald Trump promised that “[o]n day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.”[1] President-elect Trump now has signaled a willingness to retain a few popular provisions (e.g., coverage for pre-existing conditions), but it seems likely Obamacare will be replaced with some form of “TrumpCare.”  

In political parlance, “Obamacare” has become synonymous with the Affordable Care Act.  Thus, one might assume a “full repeal” would include both the unpopular health insurance reforms as well as the payment and delivery system reforms implemented under the ACA, such as shared savings programs, bundled payments, and value-based purchasing. 

In this period of post-election uncertainty, healthcare providers may consider hitting pause on their fledgling population health management and value-based care initiatives.  If the ACA reforms which were the impetus for these efforts are not long for this world, returning to a fee-for-service may seem the best strategy.

A more critical look at Mr. Trump’s proposals – particularly his commitment to free market principles in healthcare - shows that now is not the time to push pause.  Instead, this is the time to accelerate “Triple Aim” activities.  Providers must prepare to compete on price and quality, regardless of what specific programs may survive or emerge in the post-Obamacare era.

As a starting point, one must appreciate that the ACA has two distinct halves.  The front half of the ACA was an attempt to improve access to healthcare by addressing the availability, adequacy, and affordability of health insurance.  It includes everything from the much-derided health insurance marketplace to Medicaid expansion. 

In the front half, the federal government plays the role of market regulator, imposing new requirements on insurance companies, employers, and individuals.  Back in 2010, Democrats declared such regulation was the only way to ensure access, while Republicans remained resolute in their support of free market solutions.  This heated debate has continued ceaselessly right through the 2016 elections.

By comparison, the federal government assumes the role of market participant in the back half of the ACA.  With one-quarter of the federal budget- now just shy of $1 trillion a year – committed to funding federal healthcare programs, the government seeks to bend the cost curve by incentivizing providers to deliver high quality care in an efficient manner.  The back half of the ACA is a collection of programs intended to move the market to value-based reimbursement.

Calls for “repeal and replace”, therefore, would seem to be directed toward the front half of the ACA, not the payment and delivery system reforms in the back half.  No politician is defending fee-for-service reimbursement as we know it.  In fact, five years after the ACA’s passage, Congress affirmed its commitment to payment and delivery system reforms in the Medicare Access and CHIP Reauthorization Act of 2015.  MACRA enjoyed strong bipartisan support:  the final vote in the Senate was 92-8, and enjoyed overwhelming support in the House as well, passing with a convincing 392-37 vote.

MACRA creates strong incentives for physicians and other providers to participate in alternative payment models.  Also, the legislation promotes transparency in healthcare, with public reporting of providers’ scores on key quality and efficiency measures.  In fact, one could say MACRA represents the “repeal and replace” solution for the back half of the ACA, which Republicans now have made their own.    

As further evidence that the payment and delivery reforms are here to stay, take a closer look at Mr. Trump’s stated positions and their implications.  Throughout his campaign, Mr. Trump heralded free market principles as the cure for the ills of our healthcare system.   Most of his proposed reforms address health insurance: 

  • Repeal the ACA’s individual and employer mandates.
  • Permit the sale of health insurance across state lines.
  • Allow individuals to fully deduct health insurance premiums on their tax returns.
  • Make contributions to Health Savings Accounts tax-free and allow those contributions to accumulate over time.

Mr. Trump also champions price negotiations with pharmaceutical companies for Medicare Part D drugs and removal of barriers to entry for drug providers that offer safe, reliable, and cheaper products.

However, Mr. Trump appreciates how the federal government as a market participant can use its purchasing power to drive payment and deliver system reforms.  He has promised to “[w]ork with Congress to create a patient-centered health care system that promotes choice, quality, and affordability”, and he intends to “[r]equire price transparency from all healthcare providers.”  Mr. Trump also favors Medicaid block grants, believing state governments are more capable of designing and administering programs to meet low-income individuals’ needs.  

Today’s dominant fee-for-service reimbursement model is inconsistent with Mr. Trump’s vision for healthcare reform.  The model incentivizes providers to deliver as many services as possible to as many individuals as possible without regard to quality or efficiency.  By definition, the system is provider-centric and fragmented.  To control costs, the payer (often the federal government) must impose strict “medical necessity” rules and aggressively pursue fraud and abuse through a “pay and chase” strategy.    

In a competitive healthcare market, those providers who can demonstrate value to consumers – high quality care delivered in an efficient manner – will succeed.  While we may not know for certain that the Hospital Readmission Reduction Program, the Medicare Shared Savings Program, or even the Quality Payment Program will remain exactly the same under the Trump Administration, this is no reason to pause the progress made in transitioning from volume-to-value.

Pursuing clinical integration, learning to track and report on quality measures, striving for efficiency, engaging in performance improvement – developing core competencies for new payment models – will never be wasted efforts.  What will be wasted is the time spent waiting to see what will happen next. 

[1]   The quotations and explanations of Mr. Trump’s positions are derived from his campaign website, www.donaldjtrump.com.

Martie Ross, Principal with PYA Consulting