States would lower provider payments if Senate ACA repeal bill passes

The Senate's proposed legislation to repeal the Affordable Care Act could have widespread implications for healthcare providers across the country, sparking hospital closures, lower provider rates and decreased access to nursing homes if the bill becomes law.

The Better Care Reconciliation Act of 2017 proposes to cap federal payments to the states for most beneficiaries at the medical component of the Consumer Price Index starting in 2020. Growth of those payments would be limited to the much lower CPI rate starting in 2025, a formula that doesn't keep up with rising medical costs. The bill also scales back federal funds for Medicaid expansion.

Even though many of the bill's proposed changes won't kick in for three years, governors and state legislatures will need to start preparing for the decreased federal funds soon, as state budget drafting processes tend to occur years in advance.

"Governors are going to face enormously difficult choices with no good answers," former acting CMS Administrator Andy Slavitt said in a briefing to reporters Friday.

In the hours after Senate Majority Leader Mitch McConnell released a discussion draft of the BCRA on Thursday, governors from both sides of the political aisle spoke out against the bill and said it will lead to millions losing healthcare coverage.

"It appears that the proposed bill will dramatically reduce coverage and will negatively impact our future state budgets," Republican Nevada Gov. Brian Sandoval said in a statement.

Louisiana Democratic Gov. John Bel Edwards said his state saved an estimated $200 million from expanding Medicaid in fiscal 2017, and it's expected to save more than $300 million in the next fiscal year. If the bill jeopardizes those savings, the state will have to make deep cuts to healthcare and other programs, he said.

More than 50 million Medicaid beneficiaries in 39 states receive healthcare through managed-care programs. Given strict actuarial soundness requirements in law, which dictate that states must pay plans enough to cover costs and achieve some profit, states may cut physician payments or reduce eligibility to deal with shrinking federal funding, said Jeff Myers, president and CEO of Medicaid Health Plans of America.

The proposal could also lead to hospital closures and reduced access to nursing homes, according to Democratic Pennsylvania Gov. Tom Wolf.

"Seniors in need of home or nursing care, children with disabilities, and rural hospitals and working families relying on Medicaid will all be left behind," Wolf said in a statement.

Hospitals from around the country also say the legislation puts them in peril thanks to both reduced federal Medicaid funds and less generous exchange tax credits that could leave some Americans without coverage.

"Any increase in the uninsured in Tennessee is detrimental to the health and well-being of those Tennesseans and hospitals that already provide uncompensated care at a significant loss, to the tune of more than $1 billion each year," Craig Becker, president of the Tennessee Hospital Association, said in a statement.

Making matters worse, the bill doesn't repeal the Affordable Care Act's Medicare cuts, although it nixed similar levies on the medical device and drug industry. These cuts already have led to hospital closures, and their continued existence puts the future of other hospitals in doubt, Becker said.

Hospitals in the District of Columbia and the 31 states that expanded Medicaid are projected to see a 78% increase in uncompensated-care costs between 2017 and 2026, according to an analysis released Friday by the Commonwealth Fund. Eleven of these states will see uncompensated-care costs at least double between 2017 and 2026. For example, Nevada hospitals will see a 98% increase, West Virginia a 122% increase, and Kentucky a 165% increase.

Advocates are also concerned about how the bill would impact the ongoing opioid crisis. Medicaid provides coverage to more than 650,000 non-elderly adults with addiction, according to the Kaiser Family Foundation. It's the biggest single payer for substance abuse treatment, covering about $7.1 billion of the nation's $33.9 billion bill in 2014, according to a 2016 Health Affairs article.

People on Medicaid are about twice as likely as the uninsured to receive residential or outpatient treatment. Nearly 441,000 non-elderly adults with opioid addiction were uninsured in 2015.

"I have deep concerns with the details of the U.S. Senate's plan to fix America's healthcare system and the resources needed to help our most vulnerable, including those who are dealing with drug addiction," Ohio Republican Gov. John Kasich said in a statement.