Tag Archives: Medicare

Five key decisions for the GOP on healthcare

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http://thehill.com/policy/healthcare/366528-five-key-decisions-for-the-gop-on-healthcare

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Republicans have repealed ObamaCare’s individual mandate, but they still have a number of decisions to make on health care in the coming year.

Even without the unpopular mandate, the health care law is still largely in effect, with nearly 9 million people enrolled in private plans for 2018.

And beyond ObamaCare, Republicans could seek action on entitlement reform and drug pricing in 2018.

Here are five things to watch out for.

Will Republicans try again to repeal ObamaCare? 

After Republicans failed to act on a seven-year promise to repeal and replace ObamaCare, they assured voters they would return to the issue after passing tax reform.

But now that the tax law is on the books, it’s far from certain that Republicans will make another run at the Affordable Care Act. With the GOP’s Senate majority set to shrink in January, repeal might be off the table for now.

“Well, we obviously were unable to completely repeal and replace with a 52-48 Senate,” Senate Majority Leader Mitch McConnell told NPR on Thursday.

“We’ll have to take a look at what that looks like with a 51-49 Senate. But I think we’ll probably move on to other issues.”

But McConnell could face pressure from more conservative Senate Republicans — and possibly from the House — to revisit health care, no matter how steep the challenge.

“To those who believe — including Senate Republican leadership — that in 2018 there will not be another effort to Repeal and Replace Obamacare — well you are sadly mistaken,” Sen. Lindsay Graham (R-S.C.), author of the most recent repeal bill, tweeted last week.

Will Congress act to stabilize ObamaCare? 

Sens. Susan Collins (R-Maine) and Lamar Alexander (R-Tenn.) have been pushing for a vote on two bipartisan bills to stabilize ObamaCare’s insurance markets, but those efforts were pushed off until next year.

McConnell assured Collins the bills would be attached to a “must-pass” bill by the end of 2017, but that changed as Republicans scrambled to avoid a government shutdown.

Now Senate Republicans are looking to attach the ObamaCare bills to the long-term spending bill that is expected to come up for a vote in January.

But passing the ObamaCare bills is far from certain, with House Republicans demanding the inclusion of Hyde Amendment language to prevent any federal money from going to plans that cover abortions.

House Republicans have also been critical of the overall substance of the bills, arguing they’re a “bail out” of a failing law.

It’s unclear whether House Republicans would support a spending bill that contains the ObamaCare bills, but many have said they definitely won’t if the abortion language isn’t included.

Sen. Mike Rounds (R-S.C.) said Senate Republicans are looking at ways to resolve the issue, and Alexander said he’s optimistic about the bills passing in January.

“We have the president’s renewed interest, more interest from the House, Senate McConnell has renewed his commitment to schedule it and support it, so I think it’s just a matter of when we come back, putting out ideas together and finding a way to get it done,” Alexander told reporters.

Will Republicans try to tackle entitlements?

Speaker Paul Ryan (R-Wis.) has said Republicans should move to entitlement reform next year, citing the need to address the nation’s red ink.

“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan told the Ross Kaminsky radio talk show earlier this month.

While there’s broad support in the GOP for taking up welfare reform, changes to entitlement programs like Medicare and Social Security could be a tough sell.

McConnell has noted that a slim Republican majority in the Senate could put broader entitlement reform out of reach.

“The sensitivity of entitlements is such that you almost have to have a bipartisan agreement in order to achieve a result,” McConnell said at a press conference Friday.

“The only time we’ve been able to do that is on a bipartisan basis, and it was a long time ago.”

Entitlement cuts could also be politically dangerous for Republicans leading into the 2018 midterms.

Will Trump try to help ObamaCare? 

Democrats have accused the Trump administration of trying to sabotage ObamaCare by slashing the law’s advertising and outreach budget and cutting open enrollment in half.

But those actions seemed to have a minimal effect on enrollment. The administration said 8.8 million people signed up for coverage in the exchanges this year, which is only a slight drop from the 9.2 million people who signed up last year.

Democrats say these numbers show the resiliency of the law.

“[The] enrollment numbers make clear that the American people want access to high quality, affordable health insurance coverage, and they want Congress and the Administration to stop playing games with our health care system,” said Rep. Frank Pallone (D-N.Y.), ranking member of the House Energy & Commerce Committee.

Trump indicated on Tuesday that his administration still intends on repealing and replacing ObamaCare, however.

“Based on the fact that the very unfair and unpopular individual mandate has been terminated as part of our tax cut bill, which essentially repeals (over time) ObamaCare, the Democrats & Republicans will eventually come together and develop a great new HealthCare plan!”

Will Trump take action on drug prices? 

Trump came out swinging against drug companies when he took office in January, declaring that the industry is getting away with murder, but so far has taken little action on drug prices.

The administration has been preparing an executive order aimed at lowering drug prices since the summer, but critics argue the order would be friendly to drug companies.

Trump has also abandoned campaign promises to allow Medicare to negotiate drug prices and expand importation of cheaper drugs from other countries.

However, Alex Azar, a former drug executive and Trump’s nominee to lead the Department of Health and Human Services, has said that addressing h drug prices will be one of his top priorities if he’s confirmed.

“I believe I can hit the ground running to work with you and others to identify solutions here,” Azar told senators during his confirmation hearing.

 

Illinois hospitals’ financial struggles likely to continue into 2018

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http://www.chicagotribune.com/business/ct-biz-hospital-financial-struggles-20171215-story.html

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he list reads like a who’s who of hospital systems in the Chicago area: Advocate Health Care, Edward-Elmhurst Health, Centegra Health System.

But it’s a list of hospitals systems that cut jobs this year to deal with financial pressures — not a list any hospital is eager to join.

Hospitals in Illinois and across the country faced financial stresses this year and are likely to continue feeling the squeeze into 2018 and beyond, experts say. Those pressures could fuel more cuts, consolidation and changes to patient care and services.

“We have many hospitals doing their best just to survive,” said A.J. Wilhelmi, president and CEO of the Illinois Health and Hospital Association.

Moody’s Investors Service recently downgraded its outlook for not-for-profit health care and public health care nationally from stable to negative, with the expectation that operating cash flow will fall by 2 percent to 4 percent over the next 12-18 months. About three-fourths of Illinois hospitals are not-for-profit.

“(For) almost every hospital and health system we talk to, (financial pressure) is at the top of their list in terms of ongoing issues,” said Michael Evangelides, a principal at Deloitte Consulting.

A number of factors are to blame.

Leaders of Illinois systems say reimbursements from government insurance programs, such as Medicaid and Medicare, don’t cover the full cost of care. And with baby boomers growing older, many hospitals’ Medicare populations are on the rise. It doesn’t help that payments to hospitals from the state were delayed amid Illinois’ recently resolved, two-year budget impasse, Wilhelmi said.

Unpaid medical bills, known as bad debt, are also increasing as more patients find themselves responsible for large deductibles. Payments from private insurers are no longer helping hospitals as much as they once did. Though those payments tend to be higher than reimbursements from Medicare and Medicaid, they’re not growing as fast as they used to, said Daniel Steingart, a vice president at Moody’s.

Growing expenses, such as for drugs and information technology services, also are driving hospitals’ financial woes. And hospitals are spending vast sums on electronic medical record systems and cybersecurity, Steingart said.

Many also expect that the new federal tax bill, passed Wednesday, may further strain hospital budgets in the future. That bill will do away with the penalty for not having health insurance, starting in 2019. Hospital leaders worry that change will lead to more uninsured people who have trouble paying hospital bills and wait until their conditions become dire and complex before seeking care.

With so much going on, it can be tough for hospitals to meet revenue goals.

“You’re talking about a phenomenon taking place across the country,” said Advocate President and CEO Jim Skogsbergh. Advocate announced in May that it planned to make $200 million in cuts after failing to meet revenue targets. In March, Advocate walked away from a planned merger with NorthShore University HealthSystem after a federal judge sided with the Federal Trade Commission, which had challenged the deal. Advocate is now hoping to merge with Wisconsin health care giant Aurora Health Care, although the hospital systems say financial issues aren’t driving the deal.

“Everybody is seeing declining revenues, and margins are being squeezed. It’s a very challenging time,” Skogsbergh said.

Hospitals in Illinois have responded to the pressures in a number of ways, including with job reductions. Advocate laid off about 75 workers in the fall; Centegra announced plans in September to eliminate 131 jobs and outsource another 230; and Edward-Elmhurst laid off 84 employees, eliminating 234 positions in all, mostly by not filling vacant spots.

Hospitals also are changing some of the services they offer patients and delaying technology improvements, said the Illinois hospital association’s Wilhelmi.

Centegra Hospital-Woodstock earlier this year stopped admitting most overnight patients, one of a number of changes meant to save money and increase efficiency. As a result, the system “achieved our goal of keeping much-needed services in our community,” spokeswoman Michelle Green said in a statement.

Many Illinois hospitals have also cut inpatient pediatric services, citing weak demand, and are instead investing in outpatient services.

The challenge is saving money while improving care and patient outcomes, said Evangelides of Deloitte. Hospitals are striving to do both at the same time.

Advocate, for example, opened its AdvocateCare Center in 2016 on the city’s South Side to treat Medicare patients with multiple chronic illnesses and conditions. The clinic offers doctors, pharmacists, physical therapists, social workers and exercise psychologists. It has helped reduce hospital admissions and visits among its patients, said Dr. Lee Sacks, Advocate executive vice president and chief medical officer.

Advocate didn’t open the clinic primarily to help its bottom line. The goal was to improve patient care while also potentially reducing some costs.

But such moves are becoming increasingly important to hospitals.

“It really does impact everyone,” Evangelides said of the financial pressures facing hospitals. “We all have a giant stake in helping and hoping that the systems across the country … can ultimately survive and thrive.”

 

Editorial: Illinois’ home health care hustle

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http://www.chicagotribune.com/news/opinion/editorials/ct-edit-home-health-care-20171214-story.html

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For those who are ailing but hope to stay out of nursing homes or hospitals — and who wouldn’t? — there’s an increasingly popular alternative: home health care providers. These are doctors, nurses and other medical staffers who visit patients at home, with the goal of treating chronic conditions and keeping people healthy enough to avoid costly long-term stays in more intensive facilities. That saves patients, and the health care system, money.

But, as with all things in the health field, there are plenty of caveats for potential customers.

Illinois is a field of dreams for home health care fraud, the Tribune’s Michael J. Berens reports. Why? Because state public health regulators doled out too many home health licenses too fast in the past decade. The state allowed almost anyone with a $25 licensing fee to open a home health care business but fails to provide meaningful oversight on hundreds of operators. You can find Berens’ full report at chicagotribune.com/homehealth.

The upshot of lax oversight: In the last five years, area home health agencies have improperly collected at least $104 million in Medicare dollars, Berens reports. (Most patients in home health care are covered by Medicare.) Often the home health businesses did that by falsely certifying that Medicare patients were homebound and in need of nursing care.

But the problem here isn’t measured only in Medicare dollars wasted. It’s measured in patients at risk or harmed. Thousands of patients have been subjected to unwarranted procedures, therapies and tests; some were prescribed unneeded and powerful drugs, the Tribune analysis concludes.

So what can patients, and their families, do to protect themselves? How can someone in Illinois — or her family — shop smartly for a home health care provider? It’s not easy, but here are a few tips:

  • First, you can check a federal website that offers star ratings for home health providers at medicare.gov/homehealthcompare.
  • Then, be vigilant. Make sure a home health care agency coordinates care with your existing primary physician. If a home health care company makes lots of visits but does little more than check your blood pressure, be wary.
  • Check your monthly Medicare statement to monitor services that a home health care company claims to have provided.

On average, some 10,000 Americans turn 65 every day. That means the market for home health will likely continue to surge, placing greater demands on regulators.

In 2013, the federal government banned Illinois from issuing new licenses. The feds said that fraud was rampant, driven by too many home health companies for too few patients. Still, Cook County has more home health companies than the entire state of New York.

Many companies provide excellent care for their customers. The industry’s trade association, the Illinois Homecare and Hospice Council, represents about 160 providers (among the 750 or so licensed in the state).

“We support the moratorium,” Executive Director Sara Ratcliffe told the Tribune. “We want more enforcement.”

So do we. This field of dreams needs to be weeded of fraudsters. At least 357 active home health companies in the Chicago area have been linked to potential financial fraud by federal investigators but never charged.

That’s a daunting fact for families and patients seeking home health care. The state could help prospective patients by posting disciplinary and enforcement actions on the web. More sunshine — readily available information on providers’ performance and disciplinary records — would help them make a wise choice.

 

Ryan eyes push for ‘entitlement reform’ in 2018

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http://thehill.com/homenews/house/363642-ryan-pledges-entitlement-reform-in-2018?utm_source=&utm_medium=email&utm_campaign=12524

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House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.

“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview on Ross Kaminsky’s talk radio show.

Health-care entitlements such as Medicare and Medicaid “are the big drivers of debt,” Ryan said, “so we spend more time on the health-care entitlements, because that’s really where the problem lies, fiscally speaking.”

Ryan said he’s been speaking privately with President Trump, who is beginning to warm to the idea of slowing the spending growth in entitlements.

During his campaign, Trump repeatedly promised not to cut Medicare, Medicaid or Social Security.

“I think the president is understanding choice and competition works everywhere, especially in Medicare,” Ryan said.

House and Senate Republicans are currently working on their plans for tax reform, which are estimated to add more than $1 trillion to the deficit. Democrats have voiced concerns that the legislation could lead to cuts to the social safety net.

Ryan is one of a growing number of GOP leaders who have mentioned the need for Congress to cut entitlement spending next year.

Last week, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that once the tax bill was done, “welfare reform” was up next.

Sen. Marco Rubio (R-Fla.), last week, said “instituting structural changes to Social Security and Medicare for the future” will be the best way to reduce spending and generate economic growth.

Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, told Bloomberg TV that “the most important thing we can do with respect to the national debt, what we need to do, is obviously reform current entitlement programs for future generations.”

Ryan also mentioned that he wants to work on changing the welfare system, and Republicans have in the past expressed a desire to add work requirements to programs such as food stamps.

Speaking on the Senate floor while debating the tax bill last week, Senate Finance Committee Chairman Orrin Hatch (R-Utah) said he had a “rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”

His comments were echoed by Ryan.

“We have a welfare system that’s trapping people in poverty and effectively paying people not to work,” Ryan said Wednesday. “We’ve got to work on that.”

 

AARP to Congress: Don’t Cut Medicare

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https://www.aarp.org/politics-society/advocacy/info-2017/medicaid-medicare-tax-reform-fd.html?cmp=EMC-DSO-NLC-WBLTR—MCTRL-120817-F1-2613065&ET_CID=2613065&ET_RID=33152417&mi_u=33152417&mi_ecmp=20171208_WEBLETTER_Member_Control_Winner_251100_391403&encparam=rGtTYC48LtlDepUYFPD2E6KmzkAw6WgcgwvDlv37DZs%3D

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The tax bill would trigger an automatic funding cut in the vital program.

AARP Chief Executive Officer Jo Ann Jenkins called on congressional leaders Thursday to keep their promise to America’s seniors and prevent a large cut to Medicare that the tax bill now being debated on Capitol Hill would trigger.

The tax measure would result in a $1.5 trillion increase in the federal deficit over the next decade, according to the nonpartisan Congressional Budget Office (CBO). Such a deficit would prompt an automatic $25 billion cut to Medicare as soon as January because of the “pay-as-you-go” law, commonly referred to as PAYGO.

The law was designed to keep the deficit in check by requiring the administration to reduce spending in many mandatory federal programs if Congress enacts a law that increases the deficit but doesn’t provide offsetting revenue.

In a letter to Senate Majority Leader Mitch McConnell, Minority Leader Charles Schumer, House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Jenkins reminded McConnell and Ryan that they had recently issued a statement promising that “we will work to ensure these spending cuts are prevented.”

In their statement, the Republican leaders pointed out that the PAYGO law has never been enforced since it was passed in 2010 and “we have no reason to believe that Congress would not act again” to forestall the cuts PAYGO would require.

Medicaid, Social Security, food stamps and some other social safety net programs are exempt from the PAYGO law. But Medicare and programs like federal student loans, agricultural subsidies and the operations of U.S. Customs and Border Protection are not exempt.

The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to CBO. The amount could be higher in subsequent years, depending on the size of the deficit and Medicare’s budget.

The reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not be directly cut, but the reduction could have implications for the care beneficiaries receive.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” Jenkins wrote. Health care providers might stop taking Medicare patients, she added, even as 10,000 older adults are enrolling in the health program each day.

In addition, Medicare Advantage plans and Part D prescription drug plans may compensate for the cuts by charging higher premiums or shifting more costs to beneficiaries in future years.

“Our members and other older Americans are counting on you to preserve their access to Medicare services, including their doctors and hospitals,” Jenkins wrote.

20 charged in $146M healthcare fraud scheme in Brooklyn

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https://www.fiercehealthcare.com/antifraud/healthcare-fraud-scheme-164-million-brooklyn?mkt_tok=eyJpIjoiT1RZNE9HVmhObVZoTW1ReSIsInQiOiJJOVIwamhJUzZScW1XQVhjb09IakYzbWNrWVZcL1gzYlwvMm15RWllNnlxYlJkbzNoT09CblgwMWYrcVdXS2N4Q2tyeHBKa2hQeXBtRDNwQktDK0NSQ3NSOUpzRUV4VG91RjF1Z0lIdjZIK0NCaTY3UURTUHV2VnFxZzRHRjZlalJhIn0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Money, handcuffs and a stethoscope

Twenty people—four of whom are doctors—are facing charges related to a massive fraud scheme that bilked Medicare, Medicaid and other managed care organizations out of $146 million.

Prosecutors from the Brooklyn District Attorneys Office said the defendants ran an enterprise in which recruiters offered cash to low-income and homeless patients to get them to undergo a series of medically unnecessary tests at participating clinics.

They then allegedly billed publicly funded insurance programs for performing those tests and laundered the fraudulently obtained funds through the bank accounts of a series of shell companies in far-flung countries such as Taiwan and Lithuania.

Once that money reached the defendants, prosecutors said, they used it to buy expensive real estate—such as a $3.25 million apartment in downtown Brooklyn, New York—and fund shopping sprees at high-end stores like Hermes and Bulgari.

“This massive scheme, which provided no patient care at all, wasted millions of taxpayer dollars dedicated to Medicaid and Medicare,” Acting Brooklyn District Attorney Eric Gonzalez said in the announcement.

The investigation began following a referral from the Department of Health and Human Services Office of Inspector General. To uncover the alleged scheme, investigators employed undercover detectives, intercepted communications and conducted surveillance and financial analyses.

The defendants are facing charges including enterprise corruption, healthcare fraud, grand larceny and money laundering. Prosecutors said 35-year-old Kristina Mirbabayeva, of Brooklyn, was the ringleader of the scheme, and 53-year-old New Jersey resident Kevin Custis, M.D., was her business partner.

Another one of the doctors charged, 61-year-old Robert Vaccarino, was also employed as a New York Police Department surgeon, according to The Wall Street Journal. The police department said Tuesday that Vaccarino had been suspended.

At a news conference this week, representatives from the Brooklyn District Attorneys Office said the scheme was the biggest healthcare case in the office’s history, the article added.

In other antifraud news:

Prosecutors insist Florida eye doctor stole $136M from Medicaid

The attorney for Salomon Melgen, M.D., a Florida eye doctor who has been convicted of a $100 million Medicare fraud, argued at a sentencing hearing on Thursday that the government has only proven Melgen stole about $64,000.

Attorney Josh Sheptow said Melgen—who was charged separately with bribing New Jersey Democratic Sen. Bob Menendez—injected patients with then-experimental drugs that are now approved, the Associated Press reported. Sheptow suggested Melgen may have falsified billing statements to get around the fact that Medicare doesn’t pay for experimental treatments—so since the treatments were actually legitimate, the government didn’t lose money on paying for them.

But Assistant U.S. Attorney Alexandra Chase argued that the judge should accept the government’s estimate that Melgen stole $136 million, noting that even if he stole half as much, he would be eligible for a life sentence. Prosecutors are asking for a 30-year sentence.

 

CMS makes it official: Two mandatory bundled-pay models canceled

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http://www.modernhealthcare.com/article/20171130/NEWS/171139986?utm_source=modernhealthcare&utm_medium=email&utm_content=20171130-NEWS-171139986&utm_campaign=dose

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The CMS has finalized its decision to toss two mandatory bundled-payment models and cut down the number of providers required to participate in a third.

Only 34 geographic areas will be required to participate in the Comprehensive Care for Joint Replacement Model, or CJR, according to a rulemaking released Thursday. Initially, 67 geographic areas were supposed to participate.

Up to 470 hospitals are expected to continue to operate under the model. That includes the CMS’ estimate that 60 to 80 hospitals will voluntarily participate in CJR. Originally, 800 acute-care hospitals would have participated under the program.

With so many hospitals getting a reprieve, the CMS estimates the model will save $106 million less over the next three years versus what it would have saved if CJR had remained mandatory for all 67 geographic areas. The model is now expected to save $189 million over those years instead of $295 million.

The rule comes weeks after the CMS finalized a proposal to allow knee-replacement surgeries to take place in outpatient settings. When the proposal was released in July, some questioned if it was an attempt to undermine the CJR model.

The CMS has also finalized plans to cancel the Episode Payment Models and the Cardiac Rehabilitation Incentive Payment Model, which were scheduled to begin on Jan. 1, 2018. Eliminating these models gives the CMS greater flexibility to design and test innovations that will improve quality and care coordination across the inpatient and post-acute-care spectrum, the agency said.

These cardiac pay models were estimated to save Medicare $170 million collectively over five years.

The agency acknowledged that some hospitals wanted the models to continue on a voluntary basis, as they had already invested resources to launch them, but said those arguments were not detailed enough for the agency to do so.

“We note that commenters did not provide enough detail about the hiring status or educational and licensing requirements of any care coordinator positions they may have created and filled for us to quantify an economic impact for these case coordination investments,” the CMS said.

On average, hospitals have five full-time employees, including clinical staff, tracking and reporting quality measures under value-based models, according to the AHA. They are also spending approximately $709,000 annually on the administrative aspects of quality reporting.

More broadly, the average community hospital spends $7.6 million annually on administrative costs to meet a subset of federal mandates that cut across quality reporting, record-keeping and meaningful use compliance, according to the trade group.

Ultimately, the CMS decided to not alter the design of these models to allow for voluntary participation since that would potentially involve restructuring the model, payment methodologies, financial arrangement provisions and quality measures, and it did not believe that such alterations would offer providers enough time to prepare for the changes before the planned Jan. 1, 2018 start date.

The CMS acknowledged that hospitals and other stakeholders have voiced concerns that the Trump administration may not be as committed to value-based care as the Obama administration, but it insists that’s not true. The CMS said the Trump administration just believes voluntary models are the better way to go.

“We take seriously the commenters’ concerns about the urgency of continuing our movement toward value-based care in order to accommodate an aging population with increasing levels of chronic conditions,” the agency said in the rule. “We continue to believe that value-based payment methodologies will play an essential role in lowering costs and improving quality of care, which will be necessary in order to maintain Medicare’s fiscal solvency.”

 

Paul Ryan says GOP aiming to cut Medicare, Medicaid spending

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In further proof that Republicans are not giving up their push to enact major changes to healthcare policy, House Speaker Paul Ryan has signaled that the party will focus on cutting Medicare and Medicaid spending next year.

“We’re going to get back, next year, at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview with conservative talk show host Ross Kaminsky.

In addition to welfare, it’s the “healthcare entitlements”—Medicare and Medicaid—that are the major targets, Ryan said, reasoning that they are some of the biggest drivers of national debt, alongside military spending.

As evidenced by a 2015 tweet, President Donald Trump pledged as a candidate not to cut Social Security, Medicare or Medicaid, but the GOP’s legislative attempts to repeal the Affordable Care Act would have slashed Medicaid funding drastically.

Both the president and GOP lawmakers have pledged to revisit that legislation in 2018, and Ryan noted he’s making headway with convincing Trump to back Medicare cuts.

“I think the president’s understanding [that] choice and competition works everywhere in healthcare, especially in Medicare,” he said.

But while Ryan contended that entitlement reform was the logical next step after passing a tax bill that reduces revenue, Democrats don’t see it that way. They argue that Republicans only want to cut key government programs to make up for the fact that their tax bill is estimated to increase the deficit by at least $1 trillion over a decade.

Republicans’ tax bill will also have healthcare policy implications. The Senate’s version of the bill repeals the Affordable Care Act’s individual mandate, and House conservatives have said they want that provision to make it into the final draft of the legislation.

Study: ‘Big five’ insurers depend heavily on Medicare, Medicaid business

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Rising Stocks

Even as they’ve retreated from the Affordable Care Act exchanges, the country’s biggest for-profit health insurers have become increasingly dependent on Medicare and Medicaid for both profits and growth.

In fact, Medicare and Medicaid accounted for 59% of the revenues of the “big five” U.S. commercial health insurers—UnitedHealthcare, Anthem, Aetna, Cigna and Humana—in 2016, according to a new Health Affairs study.

From 2010 to 2016, the combined Medicare and Medicaid revenue from those insurers ballooned from $92.5 billion to $213.1 billion. The companies’ Medicare and Medicaid business also grew faster than other segments, doubling from 12.8 million to 25.5 million members during that time.

All these positive trends, the study noted, helped offset the financial losses that drove the firms to reduce their presence in the individual marketplaces. Indeed, the big five insurers’ pretax profits either increased or held steady during the first three years of the ACA’s individual market reforms (2013-2016). Their profit margins did decline during those three years, but stabilized between 2014 and 2016.

Not only do these findings demonstrate the “growing mutual dependence between public programs and private insurers,” the study authors said, but they also suggest a useful policy lever. The authors argued that in order to help stabilize the ACA exchanges, federal and state laws could require any insurer participating in Medicare or state Medicaid programs to also offer individual market plans in those areas.

Nevada has already done something similar: It offered an advantage in Medicaid managed care contract billing for insurers that promised to participate in the state’s ACA exchange. The state credited that policy with its ability to coax Centene to step in and cover counties that otherwise would have lacked an exchange carrier in 2018.

It’s far less certain, though, whether such a concept will ever be embraced at the federal level during the Trump administration, since its focus has been on unwinding the ACA rather than propping it up.

Either way, recent events underscore the study’s findings about how lucrative government business has become for major insurers. One of the main goals of CVS’ proposed acquisition of Aetna is to improve care for Medicare patients, which would help the combined company “be more competitive in this fast-growing segment of the market,” CVS CEO Larry Merlo said on a call this week.

Aetna CEO Mark Bertolini added that the transaction has “incredible potential” for Medicare and Medicaid members, as the goal is to provide the type of high-touch interaction and care coordination they need to navigate the healthcare system.

 

Outlook Darkens for Not-for-Profit Hospitals

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The revised outlook from Moody’s comes amid a larger-than-expected drop in cash flow this year and the ongoing uncertainty regarding federal healthcare policy for public and not-for-profit hospitals.

Moody’s Investors Service has downgraded from stable to negative its 2018 outlook for the not-for-profit hospital sector based on an expected drop in operating cash flow.

“Operating cash flow declined at a more rapid pace than expected in 2017, and we expect continued contraction of 2%-4% through 2018,” said Eva Bogaty, a Moody’s vice president.

“The cash flow spike from insurance expansion under the Affordable Care Act in 2014 and 2015 has largely worn off, but cash flow has not stabilized as expected because of a low revenue and high expense growth environment,” Bogaty said.

In a briefing released Monday, Moody’s said hospital revenue growth is slowing and is expected to remain slightly above medical inflation, which declined to a low of 1.6% in September. Hospitals can’t translate volume growth into stronger revenue growth because of the lower reimbursement rate increases across all insurance providers and higher expense growth.

In addition, rising exposure to governmental payers will dampen revenue growth for the foreseeable future due to a rapidly aging population and low reimbursement rates. Medicare and Medicaid, represent 60% of gross patient revenue in 2017, Moody’s said.

Key drivers of expense growth include rising labor costs, driven by an acute nursing shortage and ongoing physician and medical specialist hiring. Technology costs are also rising as systems are upgraded and IT staff is needed for training and maintenance. While the ACA’s arrival heralded a drop in bad debt from 2014-16, bad debt rebounded in 2017 and will continue to grow at a rate of 6%-7% in 2018, Bogaty said.

“Rising copays and use of high deductible plans will increase bad debt for both expansion and non-expansion states,” she said.

In the near-term, uncertainty regarding federal healthcare policy will have a marginal fiscal impact on NFP hospitals. Bogaty said ambiguity surrounding the ACA does affect the planning and modelling of long-term strategies, while recent federal tax proposals will add to rising costs for hospitals.

The outlook could be revised to stable if operating cash flow resumes growth of 0%-4%. A change to positive could result from expectations of accelerated operating cash flow growth of more than 4% after inflation, Moody’s said.