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Providers to bear cost burden in Republican healthcare plan, experts say

The biggest worry is that hospitals and physicians could bear the cost of uncompensated care the way they did before passage of the ACA.

Susan Morse, Managing Editor

The Republican plan to replace the Affordable Care Act claims to give Americans more options for cheaper healthcare access, the bill spells bad news for providers like hospitals, according to healthcare experts.

The biggest worry is that hospitals and physicians could bear the cost of uncompensated care the way they did before passage of the ACA.

In a letter to Congress, the American Hospital Association voiced policy concerns over Medicaid, that it said already pays providers significantly less than the cost of providing care. The AHA recommended the use of waivers that would allow states flexibility and would be more effective than imposing per-capita caps.

Much of the funding for coverage is repealed, while payments for hospital services are reduced, the AHA said.

"If coverage is not maintained at the current level, those resources need to be returned to hospitals and health systems in order to provide services to what will likely be an increased number of uninsured Americans," said AHA CEO Richard Pollack. "At the same time, while we commend the recent actions by the Congress to address behavioral health issues, as well as the drug epidemic that is impacting virtually every community we serve, it is important to recognize that significant progress in these areas is directly related to whether individuals have coverage."

America's Essential Hospitals said it appreciated the end to disproportionate share hospital cuts in the bill, but had concerns that it is going forward without a Congressional Budget Office score on what it would cost, and an estimate of how the bill might impact healthcare coverage.

"A score is crucial, as this legislation could place a heavy burden on the safety net by reducing federal support for Medicaid expansion over time and imposing per-capita caps on the program," said CEO Bruce Siegel, MD. "These changes alone could result in deep funding cuts for essential hospitals, which now operate with little or no margin. Our hospitals could not sustain such reductions without scaling back services or eliminating jobs."

The legislation would keep the ACA's provisions allowing adult children to stay on their parents' health insurance plan until age 26 and prohibiting insurers from charging people with preexisting medical conditions more for coverage as long as they don't let their insurance lapse. If they do, insurers can charge a flat 30 percent late-enrollment surcharge on top of the base premium.

[Also: Republicans roll back Medicaid expansion, pitch tax credits in bill to replace the Affordable Care Act]

But providers can expect reimbursement for Medicare and Medicaid to be less, though the new plan does not address Medicare, according to healthcare consultant Paul Keckley.

"We're going to see less reimbursement and more uncompensated care," he said. "Providers are going to be sitting there with the potential for more bad debt, shrinking reimbursement from Medicare and Medicaid."

Under the bill, Medicaid expansion would be phased out by 2020, throwing the burden onto the states for funding the program if they choose. Medicaid would no longer be an entitlement but become a capped, per-capita payment based on the number of beneficiaries per state.

The estimated 20 million people who gained insurance under the ACA will have no mandate to get new coverage and employers are no longer mandated to offer insurance plans. Individuals without an employer plan will pay for their health insurance out of tax credits based on age.

This bill, unlike earlier drafts, does include income limits for tax credits that would affect about 10 percent of the population, according to Keckley.

"Instead of premium subsidies paid to insurance companies based on a person's income status, these tax credits are paid to people who pay taxes," Keckley said. "At the end of the day, we'll find out there's not a heck a lot of difference between premium subsidies, tax subsidies and tax credits.

[Also: Andy Slavitt: GOP healthcare bill built on 'faulty' math]

Led by House Speaker Paul Ryan, Republicans released the 123-page American Health Care Act Monday night. It is expected to go to a markup in House committees starting Wednesday.

Currently, no one knows what the new bill will cost.

The bill faces Democratic opposition as well as complaints from conservative Republicans who are upset that the bill leaves in tax credits that some have called another entitlement program.

"Instead of building upon the reforms we've already made to expand coverage and reduce costs, my colleagues on the other side of the aisle have put forward a bill that would raise out-of-pocket costs for middle-class families, gut benefits for seniors, allow insurance companies to discriminate against women and cut funding for Medicaid by more than $500 billion," said Rep. Suzan DelBene of Washington said.

DelBene serves on the House Ways and Means Committee, which will mark up the GOP bill Wednesday.

"We don't have scoring, what it costs and how much revenue is offset, all that is going to be critical to the sell," Keckley said. "They kept in tax credits which were arguably the hardest line in the sand."

Keckley said he doesn't believe the new plan will cost any less than Obamacare and will cover fewer people.

The bill doesn't address Medicare, value-based payments, the Centers for Medicare and Medicaid Innovation Center or drug pricing.

But while providers will closely watch their bad debt if this bill passes, insurance companies, on the other hand, make out well under the GOP plan, according to Keckley.

For starters, there should be an uptick in demand for the Medicare Advantage market, he said.

Healthcare expert Al Babbington, CEO of PrescribeWellness, said the new legislation is pushing the burden of supporting the Medicaid population to the states.

"Over 70 million people now receive Medicaid support at nearly a half trillion dollars in expense," Babbington said. "The states will need to act fast in finding ways to reduce costs."