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GOP Trumps ACA: Strategies to Maintain Momentum During the “Repeal and Replace” Debate

Republican candidates have campaigned for years on the platform of “Repeal and Replace.” Their sweeping victories in this month’s election mean that rally cry can now take up residence in the White House with the support of President-elect Donald Trump.

The simplicity of a campaign sound bite, however, is about to run up against a complex reality that makes wholesale repeal unlikely. One week out from the election, industry stakeholders can only speculate on which of the Affordable Care Act’s 165 provisions may survive due to broad appeal (eg, family coverage until age 26, protections for pre-existing conditions) and which disappear despite the potential for a decrease in coverage (eg, Medicaid expansion, exchange subsidies, the individual mandate).

For all the hand-wringing, provider systems’ progress toward a more value-oriented approach to care delivery will prove helpful as they prepare for health care under Republican leadership. There’s plenty of momentum to build on to counter the policy pendulum swing.

Even with full Republican control, the politics and math will be complicated.
In the short-term, though, we can expect an early, cathartic roll call vote in the House to repeal. But that effort likely ends on the House floor, given the threat of a Democratic filibuster in the Senate. The hard work then begins for Republican leadership to craft their replacement that will reduce cost; allow free market principles to drive competition; and eliminate government mandates on patients, employers and providers. House Speaker Paul Ryan’s replacement plan, as well as Rep Tom Price’s repeal bill ultimately vetoed by President Obama, stake out different approaches to modifying the ACA framework even while both are centered in conservative principles.

How these principles manifest themselves in policy is not straightforward. The math still matters. This ultimately will push out the timeline for implementation. Not only will the Republican leadership need to identify a singular plan around which to coalesce, they must navigate the same complex political mechanisms that sustained the ACA this far—budget reconciliation, legislative action, executive orders and favorable rulings from the US Supreme Court. The GOP also will be cognizant of the 2018 midterm elections and may seek to stall controversial decisions to minimize the risk of major losses.

For now, expect bipartisan support to keep on track the Medicare Access and CHIP Reauthorization Act (MACRA), the payment table updates and the looming Improving Medicare Post-Acute Care Transformation (IMPACT) Act. These policies set in motion the movement toward value-based care. Free market reform principles may allow them to quickly gain even more traction.

Value-based, consumer-centric strategy plays on both sides of the aisle.
So at a time when a radically reshaped political landscape seems destabilizing, there’s actually good reason for provider system leaders to stay the course. Positive innovation will continue; new ideas will emerge. Six strategies can help system leaders keep patients at the center of their strategic decisions while positioning their organizations for stronger market forces.

  • Sharpen tools to attract and retain savvy consumers. Any uptick in numbers of uninsured, further diffusion of high-deductible plans and stiff copays, or a more long-term move to defined contribution in place of guaranteed benefits will make stellar consumer strategy even more essential. Health savings accounts and beefed-up price transparency are central to ACA replacement plans. Provider systems already have started to prepare for patients who are more judicious about the care they select. Many, for example, have upped the precision of their chargemasters for price-sensitive services and negotiated for narrow network inclusion.
  • Ratchet up cost-reduction efforts. Fiscal conservatives are unlikely to back off payment cuts even if provisions of the ACA designed to offset bad debt fall by the wayside. Any retreat on Medicaid expansion or shift to block grants for states has the potential to create enormous margin pressure. We don’t expect a rollback of stingy payment updates or reinstatement of disproportionate share payments. But savvy systems have been aiming for quite some time to manage to Medicare margins, looking to cut 20% or more from their cost structures. This challenge has sparked innovative care redesign aimed at reducing clinical variation, improving workforce productivity and better managing total cost of care. Such work will be even more essential as cost becomes the key metric for success in the market-driven health care era.
  • Leverage innovation and technology to weather what happens next. Workforce shortages and inevitable state Medicaid reinvention (yes, block grants are on the table) should energize efforts to change how health care is delivered and who delivers it. The urgency to fix behavioral health and the opportunity to advance virtual health are but 2 positive pathways for transformation under way that will remain essential no matter how the policy jujutsu plays out.
  • Become opportunistic in risk contracting. The potential demise of the CMS Innovation Center means the end of the main mechanism driving federal payment pilots and bundle mandates—but not the end of payment evolution. There will be continued public-private support for novel models that shift accountability to providers and consumers. Momentum for shared savings, patient-centered medical homes and bundled payment may ebb. But opportunities to deploy new models will persist in some local markets with employers, Medicaid and progressive commercial plans. Thus, rather than relief at a cease and desist for mandatory bundles or shared savings arrangements, provider systems may be better served by pitching their own as they position for high-stakes competition over who offers the highest-value products. We like the long-term odds for provider systems that have a superior product at a market leading (low) price point.
  • Look to lessons from Medicare Advantage (MA). Speaker Ryan is a strong proponent of Medicare Advantage. There are lessons to be learned from markets with high MA penetration rates: the program could be a blueprint for further privatization of Medicare and Medicaid and the plan offerings likely to emerge with any move to defined contribution. Large commercial insurers dominate MA, but there is clearly a play for health systems to enter the MA market, either on their own or with a payer partner. Private plan alternatives enable lawmakers to delegate politically untenable cost-containment decisions to subcontractors. That said, government funds a 45% and growing share of health spending, and that’s unlikely to fundamentally change without raising the age of Medicare eligibility or “voucherizing” the program. Those are politically charged steps that don’t—at least yet—have the support of the president-elect.
  • Embrace an enlightened view of partnerships. The race is still on to grow geographically and to secure the loyalty of more attributed lives to your health system. Collaborating with payers on new health plan offerings or gaining scale by aligning with traditional competitors are just 2 potential avenues to adapt to greater market power of local payers. A portfolio of partnerships, responsiveness to local market dynamics and an urgency to expand access remain the guideposts.

The greatest challenge for health system leaders may actually be to pay attention to the broad policy debate without being distracted by it. Tune out the noise coming from DC next year, and focus on the short list of what matters:

  1. Communicate. Changes to the ACA inform your strategy, they don’t define it. Tell everyone who will listen.
  2. Participate. Health systems have a vested interest—whether through economics or mission or both—to help reshape what happens next.
  3. Focus. The relevance of your health system in the evolving health care marketplace is tied to the 2 or 3 things that make you better than your competition.
  4. Innovate. Success with number 3 requires an appetite for trying things that may not work.

There are wild cards ahead to be sure. The Children’s Health Insurance Program (CHIP), which insures 8.4 million children, must be reauthorized in 2017. Unraveling funding mechanisms in the existing law could be a budget blow, making current tax deductibility of employer health benefit contributions an attractive kitty to raid. A large employer like GE could accelerate the transition to defined contribution health care. The Chicago Cubs could win the World Series…oh wait.

Sg2 thought leaders Steve Jenkins, Lisa Slama, PhD, and Bill Woodson contributed to this post.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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