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Safety Net CEO: AHCA Passage Rests on Backs of Poorest, Sickest

Analysis  |  By Philip Betbeze  
   May 18, 2017

The CEO of Grady Health System says the bill's passage by the Senate would cut $50 to 60 million from the health system's annual revenues and many who gained insurance through Obamacare will lose it.

The recent passage by the U.S. House of Representatives of the American Health Care Act, will affect all hospitals to some degree, but none more than safety net hospitals, which treat a large percentage of poor patients.

Why? Because a much larger percentage of their revenue depends on reimbursement from Medicaid, which expanded under the ACA, but is targeted for the majority of cuts under the AHCA.

John Haupert is not just CEO of Grady Health System, the $917 million (operating revenue) Atlanta safety-net health system. He's also the board chair of America's Essential Hospitals, the 275-member safety net hospital association.

In the wake of the House's passage of the AHCA, and in anticipation of the Senate's upcoming consideration of the Republican bid for repeal and replacement of the Affordable Care Act, HealthLeaders spoke with Haupert about his thoughts on the bill (or its Senate version) and the effects it could have on hospitals and health systems like Grady.

Following is a lightly edited transcript of that conversation.

HealthLeaders: What would be the biggest negative impact from this bill if it's enacted in its current (House) form?

Haupert: For patients and hospitals the biggest hit is that they'll pull $880 billion out of Medicaid. To me that looks like a 25% reduction in what a hospital would receive for providing for Medicaid patients.

For Grady, that would mean that about $45 to $60 million a year would be cut from our share of Medicaid funding. Many patients would lose coverage and patients who maintained Medicaid coverage would experience limited or fewer services.

To be fair, this bill does away with a couple of other things that had been contentious in the ACA that many governments would like to implement, such as work requirements and/or participation costs.

This legislation does give states more latitude on requirements around seeking work or entering workforce training programs or to have patients participate in the cost. I'm not sure all of those are bad things.

Also, the legislation that brought us the ACA ramped down disproportionate share funding, and of course, safety net hospitals opposed that. This bill does away with those cuts, but follows that with cuts in the base Medicaid program that will be more than DSH cuts would have been.

HealthLeaders: On a scale of 1 to 10, given that the House bill passed by such a narrow margin, how worried are you that what's in the bill will stick?

Haupert: I'm around a 5, because history has shown the Senate to be more willing to be pragmatic and review the facts. Already several Republican senators have made statements they won't put this through the way it is.

The margin they have there for votes is much narrower than the House and it was narrow there. Given how bizarre these days are, I still think the Senate will be there to help straighten things out.

HealthLeaders: Given that the ACA does need fixing in some areas, what specifics would you like to see in the Senate bill?

Haupert: One place to start [would be] for the Senate to look at the limitations Obamacare placed on plan design, mandating what would be covered and not giving states leeway to design the plans.

That's a bit restrictive. The issue around mandating that the participant participate in the cost was a real limiting factor too, because there needs to be some buy-in from the Medicaid participant.

It can't be much, but that does create accountability. Even with our own charity care policy here at Grady, there are copays depending on income level. All of this makes Medicaid look less like an entitlement.

I do worry in this bill about the high-risk population and pre-existing conditions. We have no children, but I have a nephew whose wife has very rare blood disorder and all that is between her and death is a drug transfusion every two weeks. Without that drug, it would be fatal.

But the cost of that infusion is around a million dollars a year. That's a pre-existing condition and even if everyone in our family pooled their money, we could not pay for it. So if she were not insured already, she would have to go into a high-risk pool that may, or may not decide to cover that, and she's a fully contributing member of society.

That's scary and they were very cavalier in their approach.

HealthLeaders: Given that Georgia has never expanded Medicaid, would this bill affect hospitals and health systems like Grady less than in states that have?

Haupert: Certainly hospitals and physicians in states that have expanded will be impacted more.

Two caveats: That's assuming incremental dollars for Medicaid expansion go away and those states take the same hit in the base payment rate. They would lose both.

We would only lose one component, but there's some confusion around how per capita or block grants would be calculated by state. Our state had a concern we would be penalized because we had not expanded in going into the base calculation.

It is possible, based on how that ends up, that a state that expanded gets expansion dollars calculated in its base so states like Georgia would be penalized for not having expanded.

HealthLeaders: If enacted as written or close to as written, will this bill affect hospitals and health systems' efforts to further integrate care, which many claim is the way to cut costs?

Haupert: When I think about coordinating care, it's more cost effective to get to a care managed population health model.

Depending on their financial state, hospitals and health systems may not have the funding to create those models. I still think our fee-for-service model over the decades has promoted overutilization because there's not been fear of not being paid for overutilization.

If the bill stayed as is, you'd see most physician groups and hospital groups moving quick to understand utilization patterns and what they can do to reduce those.

That in itself is a good thing, but it's not good that it's in response to cutting bottom out of Medicaid. I met with a representative who will remain nameless. Out of his mouth came two "ahas" for me. He said they wanted to bend the Medicaid cost curve because it's grown too fast. So that was part of the goal with this bill.

I asked why they weren't looking at numerous actions they could take to clean up Medicare. His answer was that if you touch Medicare, you won't get reelected. If you touch Medicaid, nobody really cares. The healthcare industry does have to be pushed to adopt new models of care, but to do it on the backs of the poorest and sickest is tough to understand.

Philip Betbeze is the senior leadership editor at HealthLeaders.


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