The ACA has used financial incentives to encourage hospitals to experiment with ways to improve care, which has led sizable upfront investment by many hospitals in ACOs, EHRs, staff training and hiring and creating new services.

This article first appeared February 1, 2017 on Kaiser Health News.

By Kristin Espeland Gourlay, RINPR

Much has been written about the 20 million people who gained health insurance under the Affordable Care Act, and what could happen to these patients if the ACA is repealed without a replacement. But some people don't realize that hospitals nationwide could take a big financial hit on several fronts, too.

First, it's likely that fewer patients would be able to pay their hospital bills, health policy analysts say, so the institutions would be stuck with that bad debt, as they were before Obamacare.

"If the Medicaid expansion goes away wholesale, and things go back to the way they were before this expansion was in place, a lot of those hospitals would see an increase in their uncompensated care costs," said Rachel Garfield, an analyst with the Kaiser Family Foundation. The American Hospital Association estimates that hospitals across the U.S. could lose more than $160 billion from the reduction in Medicaid revenue and the increase in unpaid medical bills. (KHN is an editorially independent program of the foundation.)

Then there's this: The ACA has used financial incentives to encourage hospitals to experiment with ways to improve their care of patients, while reducing health care's cost. That sort of experimentation has included a sizable upfront investment by many hospitals.

Massachusetts General Hospital in Boston, for example, signed agreements with physicians and insurers to create accountable care organizations, in hopes of saving money in the long run. With an ACO, insurers pay doctors for making sure the patient is getting the best and most appropriate care, instead of paying for every test and procedure a doctor does.

"We have now more than 20 different programs," said Dr. Timothy Ferris, an internist and medical director of the Mass General Physicians Organization. "Video visits, electronic consultation with specialists, home hospitalization, [and] programs for patients with diabetes and heart disease. I would be worried that a repeal of the ACA would undermine our ability to invest in services for our patients."

Ferris acknowledged that most of those experiments haven't yet saved money. But they need more time to work out the kinks safely, he said.

"One of the things that it's difficult for people outside of health care to appreciate — particularly politicians — is how long it takes to make significant improvements in the delivery of care," Ferris said. "You have to be very careful when you make changes."

Ferris said the threatened repeal of the ACA makes him worry "that the progress we've made over the past five years would be threatened."

Many other hospitals across the country have invested in accountable care organizations — often overhauling their medical records systems, hiring staff and creating new services. Dennis Keefe, head of a large hospital chain called Care New England in Rhode Island, said he, too, worries about the future of his ACO, Integra.

"I think, if there's a real change in direction away from these alternative payment models, we will be assuming risk to care for a population," Keefe said. "We have invested enormously to be successful in this area."

But these seismic changes in the way hospitals do business were predicated, he adds, on long-term support from the federal government — support that might disappear if the ACA is repealed.

This story is part of a partnership that includes Rhode Island Public Radio, NPR and Kaiser Health News.

"This is the first time the department has sanctioned a health plan in recent history. The amount is significant," said Sarah Brooks, deputy director of health care delivery systems at the Department of Health Care Services.

This article first appeared January 26, 2017 on Kaiser Health News.

By Chad Terhune

California officials have fined health care giant Kaiser Permanente $2.5 million for failing to turn over required data on patient care to the state's Medicaid program.

The California Department of Health Care Services said this was the first fine imposed against one of its Medicaid managed care plans since at least 2000. The state relies on the data to help set rates, ensure adequate care is available and monitor how taxpayer dollars are being spent in the program, known as Medi-Cal in California.

Jennifer Kent, the department's director, notified Kaiser of the sanctions in a Jan. 13 letter that was obtained by California Healthline. The department later posted it online.

"This is the first time the department has sanctioned a health plan in recent history. The amount is significant," said Sarah Brooks, deputy director of health care delivery systems at the Department of Health Care Services. "We do take it very seriously."

Kaiser isn't appealing the sanctions and the health plan said it's "working toward compliance." The company said the sanctions were in no way related to the quality of patient care or access to treatment. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

Brooks said her agency is in ongoing discussions with Kaiser and additional fines could be imposed depending on the company's actions and whether Kaiser's violations put the agency out of compliance with federal rules. That could force the state to repay money to the Centers for Medicare & Medicaid Services, which funds the Medi-Cal program jointly with the state.

Kaiser, the state's dominant HMO, is among 22 health plans that participate in the Medi-Cal managed care program, which covers about 80 percent of Medi-Cal enrollees in the state.

The Oakland-based company failed to submit data on out-of-network care that Medi-Cal patients received from November 2014 to September 2016, according to the state. Kaiser also didn't file data on "all physician-administered drugs" from March 2010 to March 2015, records show. That information is about infusions and other drugs given to patients in a doctor's office or clinic.

The insurer missed a June 30 deadline to comply and a subsequent one Jan. 1, which triggered the current penalties. The fine related to medical claims was $742,500 and the drug data fine was $1.79 million, for a total of $2.5 million.

The reporting lapses are unusual since Kaiser pioneered use of electronic medical records and health data collection. But the company indicated in a statement that being an integrated health system that operates a health plan, its own hospitals and medical groups complicated matters.

Nathaniel Oubre, Kaiser Permanente's vice president for Medi-Cal, said its systems and technology — including electronic health records — are focused on "quality, access and integration of care."

But he said the systems were not designed or updated to collect information in the format required by the state.

"We are taking steps to change this," he said. "We are making investments in technology that will facilitate compliance with the state's data reporting requirements."

Medi-Cal represents a small portion of Kaiser's overall business, and some industry experts said the company may have been hesitant to alter its information technology systems to meet the state's demands.

Kaiser said it serves about 700,000 Medi-Cal enrollees across the state. Rival Anthem Inc. serves more than 1 million Medi-Cal patients.

In Medi-Cal managed care, the state pays insurers a fixed amount per enrollee to provide comprehensive care. That's different from the conventional fee-for-service system in which the state pays medical providers directly for services rendered.

In addition to being an insurer, Kaiser runs 38 hospitals across the country and hundreds of clinics. More than 18,000 salaried doctors work at its affiliated medical groups. Kaiser operates in eight states and the District of Columbia, but nearly 80 percent of its 10.6 million members are in California. For 2015, the company reported revenue of $60.7 billion and net income of $1.9 billion.

Kaiser has faced other stiff fines from California regulators. In 2013, the California Department of Managed Health Care fined the insurer $4 million for problems related to mental health treatment.

Two years later, the managed care agency criticized Kaiser again for failing to address the long delays in treatment for mental health patients.

Brooks said the state is rolling out a new ratings system for all Medi-Cal managed care plans next year that will track the quality of patient care, appeals processes, contract compliance and other performance measures.

President Donald Trump's executive order on Inauguration Day did not provide administration officials with any new powers to unravel parts of the Affordable Care Act.

This article first appeared January 24, 2017 on Kaiser Health News.

By Julie Rovner

The Trump administration has significant power to undermine the workings of the Affordable Care Act. The bigger question is how much of that power it will use.

President Donald Trump's executive order on Inauguration Day urging federal officials to "take all actions consistent with law to minimize the unwarranted economic and regulatory burdens" of the federal health law did not provide administration officials with any new powers to unravel parts of the law.

"They had all this authority before," said Len Nichols, a health policy professor at George Mason University in Virginia who supports the health law. Trump, he said, "is signaling 'I care' " about this issue.

In the short term, efforts will be minimal, said Joe Antos of the conservative American Enterprise Institute, because the White House is still getting its personnel on board. There are no high-level political appointees yet installed at the Department of Health and Human Services, Labor and Treasury, which have primary authority over the law.

"They need their appointees," said Antos. Until more Trump personnel actually start work, he added, "I don't think they're going to be able to do much." The nominees for secretaries of HHS, Labor and Treasury are encountering various degrees of turbulence in their Senate confirmation process.

But even when the new personnel do take office, it remains unclear exactly how far the new administration will go. That's because while they can make the law stop working, it will take Congress to actually put in place something new.

"If they start down that road" of unraveling the law, said Nichols, "then the insurers will pull out as soon as possible. And 2018 will not be pretty." That's a reference to the fact that plans offering coverage in the individual market are concerned that changes would make it easier for healthy people to exit the market, leaving only sicker and more expensive people behind and no way to spread costs.

Yet both Trump and Republican leaders in Congress have vowed not to strip away anyone's insurance and to provide a "stable transition" to a new system. Trump told The Washington Post earlier in the month his goal was "insurance for everybody."

And Antos said that many of the administration's options might be more difficult than they first appear.

For example, he pointed to one item that has been widely speculated as a possible change the administration is considering: cutting back the specific requirements for benefits that have to be included in various health plans.

Although such alterations are theoretically subject to rewrite through regulations, "it's the state insurance commissioners that approve that," he said. "The states all changed their regulations in order to conform with the federal rules."

Indeed, according to the National Conference of State Legislatures, 46 states enacted more than 175 separate laws between 2011 and 2013 to bring their rules into accord with the federal health law.

Those states "might have to repeal or amend their laws if the ACA were repealed," said Timothy Jost, an emeritus law professor at Virginia's Washington and Lee University who has studied the health law extensively. "For example, states that adopted the insurance reforms into law might find their markets nonviable without the federal subsidies and mandates."

In addition, any changes made by the Trump administration would have to take care to stay within the confines of federal requirements, including allowing for public notice and comment, said Antos, which gets particularly complicated with health care because it crosses so many boundaries.

"There has to be coordination between HHS and Treasury and maybe Labor, and it has to be legal," he said. "So understanding what you can and cannot do is going to be very difficult."

To be clear, there are a couple of actions the administration could take fairly easily that would have a major impact. The largest would likely come from dropping the appeal of a lawsuit that would immediately end cost-sharing help for up to 6 million people with incomes under 250 percent of the poverty line.

That would almost certainly send the insurance market for individuals into chaos, both backers and opponents of the health law agree, and would interfere with GOP promises to try to ensure stability in the market until they can come up with a replacement.

A second, more strategic change would be to eliminate the special rule that ensures that members of Congress and their staffs can still get employer contributions for their insurance, even though the law requires them to purchase that coverage through the health law's insurance exchanges.

"If Trump undoes that, then members and staff take a pay cut of up to $12,000 immediately," because they would have to make up the premium costs on their own, said Michael Cannon of the libertarian Cato Institute, an opponent of the health law. "That will motivate members of both parties to behave differently" in the speed with which they might come up with a health law replacement.

But even Cannon, who would like to see the law eliminated as soon as possible, concedes that "the politics of those two things would be dicey."

This story has been updated to correct a reference to the Trump administration's decision on the appeal of a lawsuit over the health law. That suit deals with funding for cost-sharing help for low-income marketplace customers and does not affect premium subsidies.

Research published in the Annals of Internal Medicine found that the number of chronically ill Americans with insurance increased by about 5 percentage points in 2014, the first year the law required Americans to have coverage.

This article first appeared January 23, 2017 on Kaiser Health News.

By Shefali Luthra

As President Donald Trump and Republicans in Congress devise a plan to replace the 2010 health law, new research suggests a key component of the law helped people with chronic disease get access to health care — though, the paper notes, it still fell short in meeting their medical needs.

Research published Monday in the Annals of Internal Medicine found that the number of chronically ill Americans with insurance increased by about 5 percentage points — around 4 million people — in 2014, the first year the law required Americans to have coverage, set up marketplaces for people to buy coverage and allowed for states to expand eligibility for Medicaid, the federal-state insurance plan for low-income people. If states opted into the Medicaid expansion, people with chronic illnesses such as heart disease, diabetes, depression and asthma were more likely to see those gains.

Still, the study suggests, the law fell short in terms of guaranteeing those people could get medical treatment, see a doctor and afford medications.

The study is the first to examine how the health law affected people with these long-term diseases, which require careful and continuous management, and whose treatment drives a vast majority of the nation's health care costs. If these people don't get regular treatment they are especially likely to wind up needing emergency care.

"This hones in on the patients that are most dependent on having coverage and access," said Danny McCormick, an associate professor at Harvard Medical School and senior author on the study. "Most chronic conditions require ongoing treatment. And if you don't get it, often it results in more expensive care downstream."

As the GOP crafts its replacement plan, those findings could indicate what elements of the law are worth keeping, and what needs to be addressed. The Medicaid expansion in particular has come under heightened scrutiny from the GOP. This past weekend, a senior aide to President Donald Trump also said the administration wants to turn control of the program over to states, which experts say could result in less funding.

The researchers say their findings suggest reversing the Medicaid expansion would pose significant problems for people with long-term illness.

They used data from the Behavioral Risk Factor Surveillance System — an annual survey jointly run by state health departments and the Centers for Disease Control and Prevention — to examine records for more than 600,000 adults with at least one chronic condition. Diseases included coronary artery disease, stroke, asthma, pulmonary disease, diabetes, depression and arthritis. They compared insurance rates in the three years and examined whether people used that insurance to see a doctor.

"There's a clear difference between what happened for [chronically ill] individuals in states, based on how states implemented Medicaid. The Medicaid expansion was one of the strongest parts of the law," McCormick said.

If policymakers are serious about using health dollars more efficiently, and getting better health outcomes, he added, the findings support including such an expansion in any new policy platform.

The paper builds on research suggesting people generally were more likely to get insurance if they lived in states that expanded Medicaid. States such as West Virginia, Illinois and Kentucky — which opted into the expansion — saw double-digit gains in coverage of chronically ill people.

"Medicaid expansion is one of the tools you would think of to help people with chronic conditions – and we are seeing more evidence this is the case," said Benjamin Sommers, an associate professor of health policy and economics at Harvard's public health school, who was not involved with this study. "The question of whether this informs [the policy] debate — it clearly should. It clearly should be relevant."

That said, Obamacare was hardly a panacea, the researchers argue. Even after the law's insurance changes, about 15 percent of people with chronic disease didn't have coverage. More than one in four didn't have a check-up in 2014. About 23 percent of people with chronic disease still had to go without doctors' visits because of factors like cost. And those gaps were more pronounced for blacks and Hispanics. They were more likely on average to remain uninsured even after the health law took effect and to face obstacles in using new health insurance if they had it.

The paper suggests some possible causes: People didn't understand how to use their insurance, or they had plans that required them to pay out of pocket large copays or deductibles — flat spending fees consumers have to front before coverage kicks in. Many marketplace plans were categorized as "high-deductible plans."

"You've got hypertension or diabetes, and you have a very low income. It's really hard to take your medications" without coverage and minimal cost-sharing, McCormick said. "Someone who's insulin dependent who doesn't get insulin? it's going to result in an emergency room visit, or a hospital visit. There's a large potential for downstream complications."

But those gaps in coverage and access to care probably got smaller in the years following 2014, Sommers suggested. Other research has shown that with time, more people got insurance and learned how to use it.

"This is likely the tip of the iceberg in terms of what the Affordable Care Act was doing," Sommers said. "It's useful and part of a larger body of evidence making it clear access to care has improved among a range of populations."

But, he noted, the findings do emphasize an important issue: The health law by itself did not expand health care to all Americans, or even all Americans with chronic conditions.

"The Affordable Care Act is not a universal coverage law. It's a huge expansion for coverage but still left 20 to 30 million uninsured," he said. "Even for those with coverage, some are still experiencing challenges."

Trump has not yet offered his plan but said universal coverage will be part of his health care plan — although aides have since walked back on that claim. Meanwhile, an analysis this month by the nonpartisan Congressional Budget Office suggested that the repeal plan offered last year by Republicans eventually would increase the uninsured population by as many as 32 million.