Healthcare 2013: Get Ready for a Wild Ride!
Dec 26, 2012

Healthcare 2013: Get Ready for a Wild Ride!

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cedar-point-4With the impending blizzard ready to ruin, or at least significantly delay, one of my favorite holiday traditions – taking down the outside lights and decorations – this seems like a good time to throw another log on the Pub’s corner stove and set upon contemplating what’s just around the bend.  With implementation of the Affordable Care Act now ready to swing into full motion in 2013, might as well use this downtime to start preparing for the wild ride ahead.  So here are a few items on the horizon.

Fiscal Cliff Resolution
As written about here before, how Congress and the Administration resolve – or don’t – the Fiscal Cliff will significantly impact implementation of the Affordable Care Act in 2013.  Neither political party wants to risk being blamed for going over the cliff; yet neither wants to be blamed for, “giving in” on principles.  The resolution? Why, kick the can over Father Time’s head, landing squarely in Baby New Year’s lap once again, of course.  That means having temporary legislation in place to avoid the most feared short-term economic impacts (e.g., avoidance of broad income tax increases, extension of unemployment benefits and forestalling the nearly 30% reduction in Medicare payments to physicians).

Unfortunately, what it is does not mean is any real sense of stability or reliable framework for budgeting and appropriating funds.  Though funding for many of the ACA provisions was appropriated as part of the Act, the interconnected nature of the federal budget means that discretionary funding will still have a great impact on HHS departmental planning and implementation.

Further, it is likely that any meaningful and sustainable fiscal policy compromise will involve some legislative modification to the ACA – i.e., particularly in lieu of the need to control entitlement spending.  So until a long-term bargain can be reached there will continue to be a lot of uncertainty on the actual means, methods and timing regarding key provisions of the ACA.  Notwithstanding such uncertainty, below are a few of the more significant items that are supposed to be implemented in 2013.

Health Insurance Exchanges
Health Insurance Exchanges (HIEs) must be certified and operational by January 1, 2014.  At the latest count,  upwards of 30 states have opted not to establish health insurance exchanges on their own, which by default means the federal government will have to set up HIEs in those states.  While portions of the underlying technological and operational infrastructure can be duplicated from state to state, there is still an enormous implementation effort beyond what was anticipated.  Implementation will likely be delayed even with a fiscal agreement in place.  Likely too, will be modification to the Minimum Essential Benefits definition in lieu of projected exchange plan pricing.

The HIEs will get a lot of media attention in 2013 because of the direct impact they will have on millions of individuals and the lightening rod they are likely to become as a portended bell weather of ACA failure once implementation challenges and frustrations emerge.  At the same time, private insurance exchanges – seizing the opportunity to gain comparative perceptual market advantage – will flourish.

Medicaid Expansion
To be – or not to be – morally supportive of providing access to life saving healthcare to your poorest citizens, that is, as some have framed the debate over Medicaid expansion.  Effective January 1, 2014, Medicaid coverage is to be expanded to include individuals between the ages of 19 up to 65 (parents, and adults without dependent children) with incomes up to 138%  of the Federal Poverty Level (based on modified adjusted gross income).

More than likely, most states will find it politically unpalatable to opt out of the federal expansion once the dollars begin flowing out of Washington.  But as written here before, Medicaid coverage is a particularly sharp problem within a thicket of thorny policy challenges.  It behooves any healthcare provider with exposure to Medicaid (i.e., particularly those PA/LTC providers) to be very aggressive in staying informed regarding state Medicaid program policy developments over the next two years.

Medicare Bundled Payment Program
Payment bundling is perhaps one of the most confusing concepts in a sea of confusion that is healthcare policy because the concept both actively precedes and  transcends the ACA.  Pilot programs and demonstration projects testing whether paying multiple providers a lump sum to coordinate treatment and care of a patient for a defined condition and/or disease have been met with mixed results.  Still, provider enthusiasm to participate in such programs seems to be growing.

The difference in 2013 is that the ACA mandates CMS to begin a Medicare bundled payment pilot program to begin in January and run for five years.  The impetus of this initiative is try and drive broader, sustainable alignment across providers.  This is a voluntary program requiring application and must include a hospital, physician group, skilled nursing facility, and home health agency.  Only one entity (the contracting organization) will be responsible for allocating the payment among all providers.

To be sure, there will continue to be significant discussion, disagreement and controversy on the long-term viability of payment bundling, from both an economic and patient quality/safety perspective.  But from a more pragmatic, short-term financial vantage, providers interested in staying in business would do well to at least begin to understand what payment bundling will mean to them in the near future.

Tax Provisions in 2013
There are also a number of ACA revenue (i.e., tax) provisions that will take effect in 2013.  These include:

  • Itemized individual deductions threshold on medical expenses will go from 7.5% to 10% of AGI
  • New limit on flexible spending account for medial expenses will be set to $2,500 per year
  • Increase in Medicare Part A tax rate on wages goes from 0.9% to 2.35% on earnings over $200,000 for individuals and $250,000 for married couple filing jointly (plus a  3.8% assessment on unearned income of higher-income individuals)
  • Elimination of tax-deduction for employers receiving Medicare Part D retiree subsidy
  • Excise tax of 2.3% on the sale of taxable medical devices

    There are more provisions in 2013 worth knowing and understanding, and Kaiser’s Health Reform Source provides a sharp, interactive means of tracking these here.  Those mentioned above are just a few that should get immediate and highest priority as healthcare providers.

    Cheers,
      Sparky

Filed Under: ACA Implementation, Helpful Advice · Tagged: , , , ,
The Trouble with Avoidable Readmissions
Sep 6, 2012

The Trouble with Avoidable Readmissions

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183911-vlcsnap_2010_05_16_21h56m32s5As a Scot (my name is spelled with one, “t” because my father wanted to be sure I never forgot), I remember with both amusement and annoyance a line from the movie, Braveheart: “The trouble with Scotland is that it’s full of Scot’s.” As I see it, the trouble with trying to address healthcare costs through reducing avoidable readmissions is that there are too many readmissions. Bear with me . . .

Avoidable hospital readmissions are the lowest of low hanging political fruit in the Healthcare Reform debate, representing an immediacy of opportunity to impact aggregate healthcare spending for very little political capital in exchange. The means of cost reduction is directly controlled by the Federal government – in the form of Medicare payment reductions. And the organizations identified as the culprit deserving of such reductions are those behemoth institutions of waste and inefficiency: the hospitals (yes, that’s sarcasm).

To be sure, there is substantial evidence where individuals discharged from a hospital stay wind up back in the hospital because of factors and events that could have been avoided. But avoided by whom – how – and at what cost? Healthcare providers of all types that will be impacted by the readmission penalty had better begin to understand the economic ramifications of how these questions are going to be answered.

As has been rather widely publicized – yet from my personal observation, up until just recently still largely ignored – the Affordable Care Act (ACA) included Section 3025: Hospital Readmissions Reduction Program. Section 3025 amended the Social Security Act such that it now requires CMS to reduce payments to IPPS hospitals with excess readmissions, effective for discharges beginning on October 1, 2012 (i.e., in a few weeks). Initially, the Program has established readmission measures for Acute Myocardial Infarction (AMI), Heart Failure (HF), and Pneumonia (PN).

Excess readmission ratios are calculated by comparing national average rates of readmission for patients discharged to a hospital’s individual experience while relying on a methodology endorsed by the National Quality Forum (NQF). I recognize this is a gross oversimplification, but all of the detail you could hope to find is now widely available – whether on the CMS site referenced above or many other organizations that have made such information available on their web sites.

For FY 2013, determination of the excess readmission ratio is based on actual discharges having occurred during the 3-year period of July 1, 2008 to June 30, 2011. According to a Kaiser Health News report, more than 2,000 hospitals will begin to see payment penalties under the program due to patients being readmitted within the 30-day threshold.  The overall anticipated impact of these penalties is approximated to be $280 million over the next year.

Not surprisingly, as with many aspects of the ACA, the Readmissions Program carries with it a great deal of controversy.  Many clinicians, including physicians, who are directly responsible for the care of those individuals represented by the statistics entering into the determination of a readmission penalty feel that readmissions are ultimately driven by acute medical needs – and patients that need to be in a hospital, well, they need to be in a hospital. Simple as that. Better to pay a relatively small penalty than have a patient die trying to avoid it goes the thinking.

Yet those involved in healthcare delivery on all sides (the clinical, the social, the community and the administrative) understand first-hand the reasonable and plausible goal that the Readmissions Program is seeking to address: a reduction in readmissions that are caused by insufficient and/or improper assistance and care available to the individual after being discharged from a hospital; i.e., the avoidable readmission.

Readmissions resulting from the natural progression of a disease state, comorbidities, unexpected and/or negative reactions to post-discharge treatment – there is legitimate concern that the Readmissions Program will interfere with clinicians’ ability to effectively manage their patients’ health in lieu of what are being considered unwarranted and unwelcomed outside influences and distractions. On the other hand, readmissions that result from a decline in condition owing to non-clinical factors, such as personal trauma associated with transferring and transitioning, the failure to follow a prescribed post-discharge treatment regimen (e.g., diet, exercise, medication), the inability to keep medical appointments – these are significant contributors to readmissions that PA/LTC organizations can have a significant impact upon.

But being able to determine cause in individual cases is going to be a monumental challenge that neither the ACA, nor the regulations promulgated for the Readmissions Program, adequately address. It is going to result in a lot of finger pointing on ward floors – and underneath the tables in board rooms. So we are left with two choices: do some more complaining and hope that the ACA is repealed (and replaced by an ultimately very similar Republican approach two or three years from now), or roll up our sleeves and be innovative in spite of the regulatory challenges.

For those PA/LTC organizations wishing to pursue the latter, I suggest they begin to invest immediately in the development of an operational infrastructure that will facilitate their ability to record, monitor and report the requisite data elements that can be used to evidence all of the contributing factors leading to hospital readmissions of the individuals under their care – clearly and unequivocally. Though, in theory, a large part of the impetus for the Readmissions Program is to engage hospitals in having accountability and responsibility for patients’ welfare post-discharge, as a PA/LTC provider I would interpret that reality as being given responsibility without authority.

Remember this: knowledge is power.  Before engaging in any type of contractual agreement with a hospital that ascribes financial responsibility for hospital readmissions, the PA/LTC organization must be in a position of negotiating strength.  That strength will come from the ability to know and understand – before the hospital does – the nature and root cause of a readmission.  Power will also come from the ability to support that understanding with evidentiary support.

The other integrated concept here, of course, is risk management.  The same knowledgebase that can be used to build negotiating strength can be used to mitigate the risks  – market, operational and financial – associated with hospital readmissions.

PA/LTC provider organizations stand to benefit in several ways from the Hospital Readmissions program.  The inherent demand generated by hospitals seeking to have greater control of post-discharge outcomes should be welcomed in light of trends away from institutionalized care.  The stronger voice many PA/LTC clinical staff have sought in dealing with hospital staff is getting a well-deserved boost.  And done wisely, there are new revenue opportunities available at a time when reimbursement is being ratcheted down at every turn.

As discussed above, however, there are also substantial performance risks that will ultimately bring down some organizations before all is said and done.  Don’t be one of those organizations.

  ~ Sparky

Filed Under: Editorials & Opinions, Hospital Readmissions · Tagged: , , ,
Jul 23, 2012

Healthcare Reform Depends on Home Healthcare

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As shared in this space last week, the Council of State Home Care Associations recently completed a five-month project that was designed to gain a better understanding of how well home healthcare and hospice agencies are prepared for Healthcare Reform.  Artower Advisory Services published the summary findings and observations of that report here.  Note that throughout this post I refer to, “home healthcare” without intending to be ignorant regarding the variation in terminology and services and care provided by agencies of different types (e.g., home care, skilled home health, private duty, hospice, etc.).

Now that the survey is over and results published, I wanted to take a moment and share some background behind my passion for working with and supporting the Council’s efforts and, more generally, the home healthcare industry.  In a nutshell, I believe that if the goals of Healthcare Reform are to be achieved, there are two areas where success will be most important: Wellness and Prevention – and Home & Community-Based Services.

The former because finite resources simply cannot afford to save people from themselves forever, and the latter because the age wave will require a more efficient and effective consolidation of services and care in non-institutional settings.  And, promisingly, I believe there are great opportunities where home and community-based services can be effective in promoting and facilitating wellness and prevention – across all age cohorts.

Shortly after the March 2010 passage of the Affordable Care Act I created a reference document that summarized and organized the various programmatic funding opportunities available to organizations both directly and indirectly involved with healthcare delivery.  What struck me at the time – and does to this day – was the number of instances where home healthcare was specifically identified as a potential recipient of funding pursuant to its role in helping to facilitate the intended benefit of such initiatives.

And what also struck me at the time was the hugely important role that home healthcare must play in the evolution of care delivery models under Healthcare Reform.  There are several compelling reasons in support of this belief.  There are also significant obstacles in the way of realizing the potential of these opportunities.  I will discuss each, in turn, below.

Compelling Reasons Underscoring the Importance of Home Healthcare

Policy Advancements
First, and perhaps most important, is the continued public policy advancement that is moving US healthcare delivery away from institutional settings to individuals’ homes.  Driven by a confluence of consumer preferences (i.e., especially of the Baby Boomer Generation), desire to reduce unsustainable capital costs and recognition of the health benefits home-based care can offer, policy initiatives at both the state and federal levels have steadily been moving toward a redistribution of public funding toward home-based care, and this is certainly reinforced in the Affordable Care Act.

Valuable Positioning
Second is the existing knowledgebase that home healthcare providers possess.  They already have established business models, market intelligence, operational capabilities and the clinical acumen necessary to identify, plan and implement integrated care delivery models that bring services and care into the home.  This “ahead-of-the-curve” positioning can offer substantial advantages to home healthcare agencies as they seek to become  a valuable conduit between acute care providers and patients as part of integrated care delivery models.

Alignment with Community-Based Solutions
Third, they are quite naturally already community-based.  One of the most highly attractive programs thus far in the implementation of the Affordable Care Act has been the Community-Based Care Transitions Program.  While other healthcare provider types are in the community, home healthcare agencies very much are the community.  They are ideally situated to leverage the knowledge and awareness gained from caring for individuals in the very homes that are the foundational elements of those communities.

Ability to Transcend Care Delivery
Finally, taken together, private duty, home care, skilled home healthcare and hospice agencies represent a wider transcendence of individual service and care than any other provider type.  From providing the occasional, and as-needed, personal care services (i.e., assistance with various activities of daily living) to intensive, ‘round-the-clock medical care, home healthcare agencies are excellently positioned to facilitate holistic and integrated care delivery.

Industry Challenges

But as the ORASI© survey identified, there are substantial challenges that must be overcome if home healthcare agencies are to successfully take advantage of the opportunities presented.  Some of these challenges are within the purview of organizations to develop strategies for overcoming, while others represent exogenous considerations beyond their direct control.  Thus, to a significant degree, the latter represent important future public policy considerations that must be addressed if the desired benefits from home healthcare are to be realized.

Challenge: Fraud & Abuse
The home healthcare industry has been its own worst enemy for nearly a generation now.  The inability to self police perceptually damaging fraud and abuse has resulted in a giant target on the industry’s back that has been manifested in burdensome regulations, which have often appeared to be throwing the baby out with the bathwater.  Although widely accepted that the isolated actions of a few have resulted in broad brush castigation, perception is reality: and the reality is this is a daunting challenge the industry must address square on before it can hope to be strong participants in integrated care delivery models.

Challenge: Producing the Necessary Labor force
Home healthcare is quite obviously a very labor-intensive business.  Unfortunately, the dichotomy of projected future demand for caregivers and cost constraints holding down the ability to gain a competitive advantage through wage differential is likely to get worse before it gets better.  This phenomenon will likely be the greatest driver of industry consolidation in the near future.  Organizations that are better able to recruit, train and educate and then retain the highest quality caregiving staff will ultimately have success over competitors.

Challenge: Over Reliance on Technology
Not unique to home healthcare is the belief (hope) that technology – both care-oriented (e.g. supportive, remote monitoring,  tele-health) and information (e.g., electronic medical records, communication, operational functionality) will provide great opportunities to increase productivity and efficiency.  This is a belief that I fear will end up costing a lot of agencies their businesses.  While technology certainly offers great promise, successful agencies will recognize it for what it is: an enabler of people and processes.  If the requisite investments are not made in the latter two, expenditures on technology will only hasten the burden of financial unsustainability under Healthcare Reform.

Challenge: Non Home Healthcare Provider Acceptance
In order for home healthcare agencies to be effective participants in a world of integrated care delivery they must be able to partner with other healthcare providers in ways that add value to both those organizations – and, more importantly, their patients.  Healthcare in the US for far too long has been dominated by silos of care segmentation.  Getting different provider types to work together and across disciplines is going to require a tremendous amount of personal discomfort on the part of healthcare providers – and it is going to require a major leap of trust, particularly in the sharing of patient information.  For better or worse, the burden of building that trust rests largely on the home healthcare industry.

Policy Considerations

The home healthcare stands at the precipice of a tremendous opportunity to be the primary facilitator of innovation and the catalyst of sustainable change in how healthcare is delivered in the United States.  It is strategically better positioned than any other care provider type to embrace the underlying concepts of Healthcare Reform embodied in the Affordable Care Act.  It is also functionally and pragmatically better positioned than any other provider type to implement the several programmatic integrated care delivery initiatives of the Act.

But as identified above, the industry faces substantial challenges.  Without being able to make the requisite investments in infrastructure, knowledgebase, technology and – most importantly – caregivers, the industry will not be equipped to fulfill these expectations.  Thus, it is vital that future public policy recognize the importance of providing adequate funding necessary to develop the industry into the national care delivery network required for success.  Not only does the home healthcare industry’s success depend upon it – but the successful implementation of Healthcare Reform under the Affordable Care Act depends upon it.

  ~ Sparky

 

Filed Under: Editorials & Opinions, Home Healthcare & Hospice · Tagged: , , , ,
Jul 11, 2012

IOM Report on Mental Health & Substance Use in Older Adults

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The Institute of Medicine yesterday issued a new report, The Mental Health and Substance Use Workforce for Older Adults.  It provides the results of a study commissioned by the Department of Health and Human Services, as directed by Congress, examining the emerging and projected crisis our nation faces as a result of an insufficient geriatric healthcare workforce – specifically the capacity of that workforce to address caregiving needs resulting from behavioral/mental health conditions and substance abuse in the senior population.

It is estimated that one in five older adults in this country have one or more mental health/substance use (MH/SU) conditions.  And these conditions typically exist in individuals that also have other health problems, making diagnoses, treatment and long-term care all the more challenging.  The most common of these conditions include depressive disorders and dementia-related behavioral and psychiatric symptoms.

But substance abuse is a substantial and growing problem as well.  According to a 2009 report from the National Survey on Drug Use and Health – published by the Office of Applied Studies, Substance Abuse and Mental Health Services Administration (SAMHSA) – it has been predicted that by the year 2020, the number of persons needing treatment for a substance abuse disorder will double among persons aged 50 and older.  Unfortunately, that growth is above the linear projection owing simply to aging demographics.

Currently, however, the number of direct caregivers at varying levels of experience and responsibilities reflect the lack of historical investment in Geriatric MH/SU training and education.  As identified in the IOM report based upon their research, future caregivers will need to have expertise in the following areas:
     systematic outreach and diagnosis,
     patient and family education and self-management
       support,
     provider accountability for outcomes and
     close follow-up and monitoring to prevent relapse.

The report was also resoundingly critical of several federal agencies.  The Centers of Medicare and Medicaid Services (CMS), the Health Resources Services Administration (HRSA), SAMHSA and the National Institutes of Health (NIH) were all criticized for their failure to use their public policy influence to encourage and direct investments in workforce training in this critically underserved area.

The IOM encouraged Congress (which includes the Republican held House that again today apparently had nothing better to do than vote – what is it now, the 31st time? – to symbolically repeal the Affordable Care Act) to fund the National Health Care Workforce Commission established under that Act.  The report noted that under the Affordable Care Act, the Commission is authorized, “to serve as a national resource that focuses on evaluating and meeting the need for health care workers . . . and to build a workforce that reflects the diversity of the older adult population that it serves.”

And finally, the report provided five recommendations that together are designed to focus policy making efforts on the need for leadership, agency coordination and the accelerated development of education and training that reflects the unique needs of a senior population in need of MH/SU services and care.  In addition, the IOM believes such efforts should be directed in thematic alignment with the Affordable Care Act (i.e., being able to evidence the relative value of investments in this area of need).

What will come of this? Well, we know it’s certainly not an ideal environment to be lobbying for new expenditures, even when/if those investments were theoretically already initiated through the Affordable Care Act.  And pragmatically, it seems reasonable to assume that the House is not likely to fund the National Health Care Workforce Commission any time soon.  And we also know that as 32 million new Americans come on line with healthcare coverage (whether through Medicaid expansion or insurance exchanges) the demands of the primary care workforce will grow substantially.

But the senior population in need of MH/SU caregiving have several distinct advantages over the younger generation driving primary care investments: namely, a great deal more wealth, better insurance and a dominant voting bloc.  So while in the short run governmental funding of workforce investments may not be able to meet the projected demand for MH/SU services and care, private investment – whether from nonprofit or for profit organizations – could be richly rewarded.

And as a practical reality, those organizations that provide post-acute and long-term care to seniors are already sharply aware of the need for MH/SU as a core element of their overall approach to achieving better outcomes.  As we continue along the path toward integrated care delivery models, the inclusion of MH/SU will have to be developed and provided as a matter of necessity to achieve relatively better outcomes than competitive providers.  Knowing (accepting) that reality should be sufficient incentive to drive private investment in workforce training and education, irrespective of public policy initiatives.  The challenge will be in figuring out how to do it in a way that achieves the requisite return on investment.

  ~ Sparky

Filed Under: Behavioral Health and Substance Abuse, In the News · Tagged: , , , , ,
Jun 28, 2012

Implications of SCOTUS Decision on Medicaid Funding of PA/LTC

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Before I get to the heart of this post (the Medicaid story), please allow me to share some additional thoughts up front.

Dewey Wins Moment
First, as was announced this morning, the Supreme Court has found the Affordable Care Act is constitutional in its entirety (noted exception regarding Medicaid expansion).  I was following the announcement on the SCOTUS blog this morning (where it was shared that the Individual Mandate was upheld), and so I had a very hearty laugh listening to John King of CNN go on for nearly five minutes about the implications of the Individual Mandate being struck down.  Apparently, a reporter in the Court read the opinion passage that, “the individual mandate thus cannot be sustained under Congress’s power to ‘regulate Commerce’ ” and failed to keep reading.  Ah, the risks of wanting to be first.

Maintaining Political Perspective
Second, a modest word of caution.  As I have written here and shared with industry peers and constituencies in various other formats, this is another step along the path of Healthcare Reform.  The next challenge the Affordable Care Act faces is the fall elections.  And I would not be the least bit surprised – or really, at all disappointed – to know that Republican strategists are in a back door way pleased with this decision because they can now use it to energize their voting base.  It will be a rallying cry to get the vote (and donations) out.  Democrats will have to redouble their efforts (if not their campaign fund raising) if they want the ACA to survive in tact beyond the 113th Congress.

But, it will be very difficult now to rescind the entire Act regardless of what Messrs. Romney, Boehner, McConnell, et al would like us to believe.  First, there is the political reality of having to not only win the Presidency but to maintain a majority in the House and take back control of the Senate.  I think retaking the Senate will actually be a longer shot than Romney defeating Obama.  Second, by the time any new legislation could be drafted, vetted and passed, the ACA will be well into implementation.  Trying to go backwards at that point would have devastating social and economic consequences that elected officials of any stripe are unlikely to want to be associated with.

There very well could – and I would expect, regardless of election outcomes, will – be some modest tinkering in the future.  We still have the economic realities of a very fragile world economy that keeps us teetering on the brink of another deep recession.  So I think it is likely the essential benefits definitions and actuarial soundness of insurance plans under standardization of coverage will be tightened up in ways that improve budget projections. 

Medicaid Expansion
To some, like me, this part of the decision was more of a surprise than the IM being found as constitutional – and there could, potentially, be rather significant implications for post-acute/long-term care providers.  I am not by a long stretch a legal scholar, but I will try to give you my best understanding.

Title II, Section 2001 of the Act – Medicaid Coverage for the Lowest Income Populations – expands coverage for individuals with incomes at or below 133 percent of the federal poverty level ($14,856 in 2012).  As a practical matter, this means expanding coverage for adults without children or disabilities.  According to a May 2010 Kaiser Family Foundation Report, it is estimated that an additional 15 million individuals will receive beneficial healthcare coverage under this provision by 2019 at an estimated cost of $465 billion.

According to 42 USC § 1396c – Operation of State plans, the Secretary of HHS has the ability to withhold federal funding of a state’s Medicaid program for failure to comply with federal requirements (this was existing code not altered by the ACA).  Thus, states not complying with provisions of Section 2001 of the ACA would be at risk of having all federal Medicaid funding cut off – not just funding of the Medicaid expansion.  In lieu of the ACA’s Medicaid expansion, the Court found that application of 1396c in such instance would be unconstitutional because states could not have anticipated such an onerous exercise of coercion when electing to participate in the original Medicaid program.

The remedy of this finding is that the Act must be amended such that 1396c would not apply to a state’s decision whether or not to participate in the Medicaid expansion under Section 2001.  So, in theory, states now have the option of whether they want to participate in the Medicaid expansion or not.

Now, given that the program’s design will initially provide 100% federal funding for newly eligible enrollees under the expansion program – declining to 93% by 2019 – I cannot imagine how any state would choose not to participate.  It would seem to be political suicide for an elected official to forgo federal funding to expand healthcare coverage to the poor when the relative impact on that state’s budget is, by comparison to federal spending, rather small.  And by not participating, that state would essentially be choosing to lose a portion of the taxes paid by its citizens that will benefit the poor in other states.

On the other hand, as we witnessed when several Republican governors chose not to accept economic stimulus funding, there is a very real possibility that some states may choose to opt out of the Medicaid expansion as objection or disagreement with the expansion (or the Affordable Care Act in general).  Add to that concern over the potential Medicaid Crowding Out effect, and you can see where some states may choose to opt out of Medicaid expansion.

In as much as many post-acute and long-term care providers are very dependent upon state Medicaid funding, the ripple effect of how this plays out in the months ahead will be something such organizations will want to watch closely.  And, of course, we will be actively monitoring such developments here in the Pub.  There could be significant state policy ramifications impacting the budgeting of Medicaid funding for post-acute and long-term care.

That’s what I think, anyway.  I would be very interested to know what you think.

  ~ Sparky

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: , , ,
Jun 15, 2012

SCOTUS Decision Day Approaches

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Okay, it’s prediction time.  We are about to head into the back half of June next week, and that means we have a two week period now during which the Supreme Court will hand down its decision in what is one of the most notorious cases that institution has ever deliberated.  No, it doesn’t rank up there with Marbury v. Madison, the Dred Scott Decision, Plessy v. Ferguson or Brown v. Board of Education – but it is likely to be remembered as the most impactful decision on future public policy since Roe v. Wade in 1973 for our generation.

So here is my prediction.  SCOTUS upholds the Affordable Care Act in its entirety.  Now, I have read more than I wanted to of the assessments, opinions, analysis – and the all-to-irritating opinions cloaked in very weak and self-serving analysis.   I have browsed through the transcripts of oral arguments presented before the Court.  I watched and listened to legal scholars, former judges and elected officials from every level of government.  And the one key takeaway I have from assimilating those hours of my life wasted is this: nobody at this point in history has any more inkling of how SCOTUS is going to decide than you or I. 

The legal arguments, particularly those that are based upon Constitutional Law and History, I found fascinating.  I wish I could believe that those arguments – on all sides of the issues before the Court – would carry the greatest weight to effecting a decision.  But Supreme Court Justices are human, after all, and subject to social influences – to what degree is the subject of some very interesting (if not quite useless) analysis.

And the Supreme Court’s standing in public opinion has taken a real beating. A recent opinion poll shows an approval rating of only 41%.  This has to carry some influence – regardless of the external rhetoric.    But while the logical consequence would be to assume such disfavor would weigh on the side of deciding against the ACA, I think the opposite will happen.  I think, in particular, Justices Roberts and Kennedy will not want to appear unduly influenced by public opinion and out of step with their historical vantage on previous decisions.  I also think they quite rightly understand that their decision – in either direction – will ultimately serve as the catalyst to energize the political party disappointed in that decision.  And so regardless of what they decide, the Affordable Care Act will de facto be sent back to Congress in one manner or another.

But please remember the SCOTUS decision is really a side show at this point to Healthcare Reform – particularly as reform will impact care provider organizations.  This holds true for the fall elections, as well, which will be the next round of political exchange impacting the reform effort however the Court decides.  At issue is when and how reform will be implemented – not the impact it will have on healthcare providers.

The underlying trends and drivers that brought us to this place in history will not abate because of a court decision or election.  The population will continue to age; people will continue to live longer and be sicker longer; the available caregiving labor force will continue to face challenges keeping up with demand; State budgets will continue to be under tremendous pressure; and the world economy will continue to influence the US economy in ways that are still very unpredictable.

But it’s fun to make predictions in any event, especially since this one has had such drama leading up to it.  So I’ve given you mine.  What’s yours?

  ~ Sparky

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: ,
Jun 7, 2012

Being Proactive in the Face of Uncertainty

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While none of the Policy Pub’s guests have provided any comments yet (I’m hoping a few more “spirited” posts will begin to wear down the  contributory inhibitions), several patrons have emailed me privately and asked whether I had any practical advice on how to approach this period of policy limbo – between before knowing how SCOTUS will decide and the outcome of the fall general election.  So I thought this might be a good opportunity to offer some advice.

Accept the Brutal Reality
Often lost in the din of popular media reporting on the Healthcare Reform debate are the irrefutable realities that underlie how and why it has become a major public policy issue in the first place.  The Internet is replete with charts and tables illustrating the debated evidence of unsustainable healthcare spending.  I think a very poignant and candid assessment that ought to resonate with business-minded individuals can be found in the January 2012 Standard & Poor’s credit report, Mounting Medical Care Spending Could Be Harmful To The G-20’s Credit Health.  It was noted there that, “steadily rising health care spending will pull heavily on public purse strings in the coming decades. If governments do not change their social protection systems, they will likely become unsustainable, in Standard & Poor’s Ratings Services’ view.”

The will to control healthcare spending is not a Republican or Democrat phenomenon.  So holding out hope that future policy outcomes directed at the behest of either current or future elected officials, irrespective of political party, will somehow relieve the pressure is a fantasyland belief that only serves to psychologically forestall the inevitable.  Healthcare organizations that are able to accept and internalize knowing that they will have to compete on value in the future will survive – those that do not, will not.  It is really as simple (and brutal) as that.

Use this Time to Answer Some Tough Questions
If the Affordable Care Act is either partially or fully struck down – and/or the general election delivers a major shift in party majority, there will be a brand new tsunami of political opportunism in its wake.  It will take a fair amount of time (I am betting six quarters, at least) for that special interest flooding to subside to the point where any type of meaningful legislation can be passed replacing the ACA.

What impact that actually has, however, on the timing of the policy-driven financial realties that senior housing and care providers are facing is unclear because much of the ACA’s impact is not scheduled to begin until 2014 in any event.  And while we wait for the Federal government, State budgetary pressures will continue to mount.  So I think a prudent approach is not to mark the passing of time by the political winds but assume that every month going forward should reflect a quantifiable movement toward a future state vision of your organization that is more lean, more efficient – and is able to deliver more value than your competition.

To accomplish this, however, you first need to decide what that future state vision looks like.  I just finished a new whitepaper on strategic planning and positioning that discusses the importance of visioning in context.  For the purposes of this post, I think the relevant questions that need to be answered by most organizations – and very soon – are:
     What business(es) are we in?
     Who really are our constituents and stakeholders –
        and how do we bring value to them?
     Are we ready to partner with other healthcare 
        providers – and under what circumstances?
     How do we ensure that our investments create
         future option value?
     Where are the opportunities to monetize our value
        chain into revenue?

Be Ready to Negotiate
If there was one skillset I would say – on average – represents the weakest link for high quality, high value senior housing and care organizations desiring to thrive in a future world of Healthcare Reform it would be the ability to negotiate business deals.  It is just not an inherent skill that seems to be well correlated with other leadership qualities that are of paramount importance – and have historically been sufficient to achieve leadership excellence.

That is changing, and quickly.  Effective negotiation will determine whether you are  “bought by” or “merged into” another organization.  It will determine whether the acquisition you make increases or decreases the overall value of the combined organizations.  It will determine whether you drive the terms and conditions necessary to financially survive under managed care, or accept what you’re given – and hope for the best.

When the time comes to partner with other market participants (whether those are community-based organizations, physician groups operating as a medical home or  hospitals) you don’t want to be sitting there with your hand up, saying, “oh pick me, pick me!” You want to know well in advance what you bring to the table, what it is worth and what you demand for that value.

Create an Opportunity Assessment Matrix
Finally, senior housing and care organizations will have to be able to react more quickly to opportunities than they have in the past.  As Healthcare Reform – in whatever final format that takes – begins to roll forward in earnest, market dynamics will accelerate.  New – and often unexpected – partnership opportunities will emerge.  Being able to react quickly – and before the competition – will be a huge strategic advantage and key to survival.

One idea that we have found helpful is the Opportunity Assessment Matrix.  This is a concept that we have used with several senior housing and care organizations, and it is a tool that is designed to streamline the process of identifying, assessing, analyzing and prioritizing market opportunities.  It is also helpful in mitigating risks and ensuring the requisite organizational support is in place before valuable resources are invested in pursuit of alternative opportunities.

The concept is basic: discuss, agree upon and document the various elements that any potential opportunity must possess to merit consideration.  Determine the relative weights of those elements in the context of the organization’s business strategy.  And then create a consistent methodology for who and how the individuals responsible for assessing the opportunity will be engaged.

Hope this is helpful . . .
  ~ Sparky

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