How will the Elections Affect Healthcare Delivery?

The 2016 presidential election prompted widespread discussion about how a Trump administration could affect healthcare delivery, payment models and facility development.

Nathan Bays, general counsel and executive director of The Health Management Academy, shared his perspective during the sixth annual healthcare seminar in St. Paul. The AIA-accredited program brought together healthcare providers, developers, facility designers, engineers and project managers.

Camille Helou, CHC, MSCM, vice president and director of the Healthcare Group, introduced Bays’ presentation with context on national healthcare spending.

U.S. healthcare spending reached $3.2 trillion in 2015, or 17.8% of gross domestic product. Projections at the time anticipated annual healthcare spending growth of 5.5% through 2025, reaching 20.1% of gross domestic product.

The Affordable Care Act and Federal Policy Changes

Bays noted that the election outcome created uncertainty around the future of the Affordable Care Act, often called the ACA.

He anticipated that congressional action could focus first on defunding provisions tied to the federal budget, including individual and employer mandates, reinsurance and readjustment programs, health insurance exchange subsidies and Medicaid expansion. Other programs, such as the Center for Medicare and Medicaid Innovation, Medicare Shared Savings Program and accountable care programs, could not be removed through the same defunding process.

Bays also identified Medicaid reform as a likely focus. At the time, he described commercially insured patients as a primary revenue source for healthcare facilities, Medicare reimbursement as approximately break-even and Medicaid reimbursement as below the cost of care.

The ACA’s moratorium on new physician-owned hospitals was another provision Bays expected could change.

Nathan Bays, Esq.

Value-Based Payment Models Were Expected to Continue

Despite uncertainty around federal policy, Bays anticipated ongoing movement from fee-for-service reimbursement toward value-based payment models.

He described bipartisan support for pay-for-performance approaches and noted that program mechanics could change, with physicians gaining greater control and hospitals having a different role.

At the time, fee-for-service accounted for about 80% of healthcare payments, largely through government payers and Medicare. However, the industry continued to move gradually toward value-based payment.

Read more about healthcare trends and the future of care delivery.

MACRA and Physician Payment

Bays described MACRA as a federal delivery-system reform with the potential to affect physicians more directly than the ACA.

MACRA, enacted with bipartisan support in 2015, established two reimbursement pathways: MIPS for many fee-for-service providers and APM risk-bearing models. The APM models offered incentives and reduced some of the administrative requirements associated with MIPS, encouraging more physicians to adopt value-based payment approaches.

Bays expected MACRA to remain in place, even if healthcare policy and program administration changed.

Potential Winners and Losers

Bays identified several sectors that could be affected by policy changes:

  • Potential beneficiaries: medical device manufacturers, physicians and pharmaceutical companies.
  • Potentially affected sectors: inpatient hospital facilities and pharmaceutical benefit managers.
  • Sectors with less certain outcomes: post-acute care providers and health plans.

The Health Management Academy’s pre-election quarterly survey found that 36% of healthcare executives identified operational issues as their top concern, followed by payment-model changes.

Implications for Healthcare Facility Development

Bays expected healthcare development to continue shifting toward outpatient settings, driven by public policy, commercial payers and value-based payment models seeking lower-cost care locations.

He also expected healthcare merger and acquisition activity to remain active and anticipated continued financial pressure on long-term and post-acute care providers because of reduced government reimbursement.

For healthcare organizations, facility planning needed to account for evolving care delivery models, outpatient demand and changes in reimbursement.

Explore healthcare construction experience, healthcare policy considerations in Will Elections Affect Healthcare Delivery? and healthcare facility priorities in National Health Care Facilities and Engineering Week.