Healthcare Decision One Week Later: Analysis and Implications for Providers

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Now that the dust has somewhat settled after the Supreme Court's decision to uphold the Patient Protection and Affordable Care Act, it's worth considering why the law was passed in the first place, and what will happen next for hospitals and providers.

Ken Perez, director of healthcare policy and senior vice president of marketing at MedeAnalytics, recently led a webinar discussing the build up to the Court's decision, as well as the implications of the ruling for providers.

Build up to the Supreme Court decision
"We've had a problem with healthcare for quite some time now," Mr. Perez said. He discussed three concerns that initially led to the passage of the PPACA.

PPACA ushers in hospital reform
The 2,400 page "far reaching" law impacts hospital providers in several ways, Mr. Perez said. First, hospitals will face sizable reimbursement cuts over the next decade — cuts many have already been bracing for. CMS' estimates IPPS payment reductions from FY 2010 to 2019 will total $113 billion. That constitutes around 80 percent of the $143 billion reductions in healthcare spending originally called for in the PPACA, Mr. Perez said.

"Hospitals are paying for a majority of the reductions," he said.

The law also promotes restructuring and more integration in the medical community to increase efficiency and reduce costs. Though structures such as accountable care organizations are not dependent on the law, they are reforms embraced by the PPACA and CMS.   

Supreme Court rules PPACA constitutional
Twenty-six states, two individuals and the National Federation of Independent Business challenged the constitutionality of the PPACA. Moreover, 136 amicus briefs were filed. Before the Supreme Court heard oral arguments in March, two Circuit Courts had already upheld the law, one had deemed the individual mandate a tax and, thus, dismissed the case, and another Court had struck down the law in full.

After six hours of arguments in March, the Supreme Court made its decision and finally released it to the public last week: in a 5-4 vote, the Court upheld the law, deeming the individual mandate a tax. As Mr. Perez put it, the law was "upheld with a twist of irony."

As for the expansion of Medicaid called for in the PPACA, the Court, in a 7-2 vote deemed the withholding of all Medicaid funds from states unconstitutional, originally called for in the law if states refuse to follow federal guidelines for Medicaid expansion.

Impact of the Court's decision on hospitals
Once the Supreme Court released its decision, a tidal wave of opinions came out. Mr. Perez referenced some of the political leaders who commented, from Minority Speaker of the House Nancy Pelosi's (D-Calif.) — who invoked the memory of deceased Sen. Ted Kennedy following the Court's ruling, saying he helped pass it from heaven — to GOP-presidential candidate Mitt Romney, who declared he would make "replace and repeal" of the healthcare law a top priority if elected.

Aside from the reactions of politicians, the most important thing people working in healthcare want to know is how the decision will affect their industry.

Mr. Perez addressed three points hospitals need to consider moving forward.
  1. Hospitals can operate in a temporary bubble until November. As Mr. Perez pointed out, any repeal effort from Republicans in the house will not pass through the Democratic-controlled Senate, much less the president's desk. Therefore, hospitals know that, until the presidential and congressional elections, the PPACA will remain.
  2. Financial impact of the PPACA on hospitals.  Mr. Perez said that hospitals will have to come to grip with the fact that the long-term financial impact of healthcare reform may be negative. He noted Medicare reimbursement cuts.
  3. Some PPPACA reforms may help keep hospitals on track for improving quality and efficiency. "The fee-for-value change has left the station," Mr. Perez said, meaning that the value-based payment "train" is on its way. It will become increasingly important for providers to prove quality of care improvements in order to get the highest level of reimbursement. Mr. Perez also discussed the building blocks for successfully achieving accountable care: health information exchange, data analytics and electronic health records.

Mr. Perez also suggested hospital leaders should stay on top of the federal debt deal from last year — under sequestration, there's an automatic two percent cut in Medicare. Hospitals might end up disproportionately affected by this across-the-board cut if Congress doesn't act, Mr. Perez said.

MedeAnalytics has launched a webpage resource about the Supreme Courts' decision and what it may mean for providers. Click here to visit.

More Articles Related to the Healthcare Law:

PPACA Upheld: 8 Issues Hospitals Should Keep in Mind Moving Forward
What the Healthcare Law Ruling Means: 4 Points to Keep in Mind
Group Health Plans May Be More Cost Effective for Employers Than Exchanges

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