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Federal Focus

The ACA: Repeal & Replace 

In 2017, Congress considered substantive changes to the Affordable Care Act (ACA). The Republican alternative, which narrowly passed the House of Representatives in early May 2017 on a party-line vote, was coined the "American Health Care Act" (AHCA, for short).  While the AHCA would make significant changes in the health care landscape it was far from a "repeal" bill.  In fact, much of the ACA would remain even if the AHCA was signed into law as passed by the House of Representatives.  For example, cuts to Medicare designed to pay for Medicaid Expansion would remain in effect even though the AHCA proposed to winnow away and eventually do away with Medicaid Expansion.  

Sometimes our position is influenced by the finer details such as these.  However, with the AHCA our position was (and continues to be) rooted in a much more basic philosophy.  

When considering advocating for or against any particular piece of legislation, BJC's first order of business is always to assess the impact it will have on patients.  Many of the 24 million Americans projected to lose coverage if the AHCA had been signed into law are our neighbors, friends or family.  And, many of those who would remain insured would be again subjected to discriminatory pricing because of pre-existing medical conditions or because of their age.  Because we believed the AHCA fell short of ensuring that patients have access to affordable coverage, we opposed its passage and actively engaged members of Congress to that effect.  

Still, Congress made numerous attempts to pass "reforms" to the ACA.  And, the ACA itself provides the federal government broad regulatory authority to make changes that impact hospitals and health systems and the many patients they serve.  Even though there does not appear to be consensus on a legislative solution, we remain committed to the principles outlined above and will continue to engage Congress and CMS when and if issues arise that run contrary to the intent of the ACA.  

Socioeconomic Status

CMS is in a vast transition period as it shifts its reimbursement methods to emphasize performance and outcomes over volume of services delivered. In theory, this is a laudable endeavor. In practice, however, it has had severely negative implications.

The most glaring problem in CMS’s revised methodology is the failure to account for differing patient populations’ socioeconomic (also referred to as sociodemographic) status. That is, hospitals across the country that care for poorer populations (which are generally sicker) are held to the same outcome standards as those that treat wealthier (and generally healthier) populations.

One succinct example lies in the new penalties that are applied to hospitals that have lackluster outcomes in hospital 30-day readmissions. As the American Hospital Association (AHA) notes, there are a variety of factors outside of a hospital’s control which contribute to an individual being readmitted within 30 days. Socioeconomic status is one such factor. The result is that many of the nation’s urban and academic hospitals are being penalized for caring for our nation’s inherently sicker and more vulnerable patient populations.

Simply put, socioeconomic status affects a patient’s health outcomes regardless of the quality of care they receive. Our institutions, like Barnes-Jewish Hospital and Christian Hospital, that care for these patients should not be penalized for caring for all populations.

While there is much work to be done to fully risk-adjust these types of penalties, BJC Government Relations has advocated for two important changes that recently won approval.  First, Congress passed the 21st Century Cures Act which contained a provision to risk-adjust for those dually eligible for both Medicare and Medicaid.  Also, CMS announced that it would be moving to the use of the Worksheet S-10 Cost Report in calculating uncompensated care costs.  This worksheet better captures the actual costs to hospitals in providing care for those who are under/uninsured, which will subsequently improve the reimbursement due to providers who care for disproportionate amounts of these populations.  

Quality Ratings

Similar to our concerns with CMS’s readmissions penalties, we have joined hundreds of hospitals around the country, the Association of American Medical Colleges (AAMC) and the American Hospital Association (AHA) in echoing concerns about CMS’s new star ratings system. Similar to how a movie critic judges a film, CMS is attempting to boil hospital quality ratings down to a 5-star ratings system. To quantify health care quality in such a simplified way is inherently flawed, from our perspective. 

CMS took steps in December 2017 to improve the ratings by removing smaller, low-volume hospitals from the calculation.  Those hospitals tended to perform very well in the star ratings because they only needed to excel on a few quality metrics with a significantly smaller patient population.  This distorted the ratings and artificially lowered the scores for hospitals who see more patients, and are graded on dozens of additional metrics.

Although we think this change improved the star ratings, we think the overall system remains problematic for the reasons outlined above.  And, again, CMS has chosen not to factor in the socioeconomic status of a hospital's patient population into the scoring methodology.

We continue to make a case for a shift in CMS's underlying methodology, and for the inclusion of socioeconomic status as a factor in the star ratings.

Prescription Drug Costs

Federal law requires that prescription drug companies sell drugs at their best price to state Medicaid programs (most Medicaid services funded by roughly 60% federal funds).  The 340B program was established in recognition that certain providers, like Critical Access Hospitals and Disproportionate Share Hospitals (safety net hospitals), see a large number of patients either covered by a government insurance plan or that are uninsured altogether. Similar to the Medicaid best price mandate, providers using the 340B program are eligible to receive high-cost drugs at a significantly reduced price, allowing their patients to receive more affordable care.  

CMS recently announced significant cuts to the 340B program, increasing costs to hospitals dramatically.  Some in Congress, at the behest of pharmaceutical companies, are also working to altogether rescind or significantly restrict the 340B program.  BJC will continue to stand in opposition to these forces that will negatively impact patient care.

Physician-owned Hospitals

Since 1989, Congress has recognized that certain types of business relationships in the health care industry can contribute to improper care recommendations and overutilization. Hospitals that are owned by physicians are one such example where the conflict of interest is simply too great. We have long concurred with Congress that a physician that has the authority to refer a patient for care should not own outright or in part a facility to which he or she is referring patients. We continue to monitor Congress’s proposals to ensure that this longstanding policy remains the standard.

Medical Education (Adult and Children’s)

Training the next generation of physicians requires teaching hospitals to assume an increased financial burden. Graduate Medical Education (GME) payments are designed to help cover the costs of training new residents. For example, these payments go toward residents’ stipends and fringe benefits, the salaries and benefits of supervising faculty, designated overhead costs associated with teaching in a hospital setting, and direct costs such as administrative and location fees. Coupled with GME Payments, Indirect Medical Education (IME) payments assist with the higher costs associated with the accommodation of medical students in the patient care setting.

Though teaching hospitals provide millions of dollars in critical patient care services to a diverse patient population, they are faced with the potential of up to a 70% reduction in GME/IME payments from Medicare – a situation which is complicated by the fact that teaching hospitals are not fully reimbursed for the costs of graduate medical education. Every year, there is a multimillion dollar gap between the cost of educating new physicians and GME/IME payments we receive. The current model is simply unsustainable. Children’s Hospital GME is separately appropriated by Congress and we continue to push for training the next generation of professionals caring in the pediatric space.

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Page updated 3/28/18

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