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Posted December 2nd, 2016 in Top Stories, Legal Insights

What Trump’s HHS Secretary Appointment Could Mean for Healthcare Providers

President-elect Donald Trump announced on November 28, 2016, that current House Budget Chair Representative Tom Price is his choice for Health and Human Services (HHS) Secretary. Many providers are wondering what health care reform could look like under Price’s appointment. While Congress will present the ultimate reform initiative to Price to implement in his new role, Price’s past healthcare reform efforts are likely responsible for his selection as HHS Secretary, and therefore his proposals should be given consideration.

Price authored an Affordable Care Act (ACA) replacement plan in 2015 entitled the “Empowering Patients First Act” (EPFA). Price’s EPFA suggests extensive healthcare reform, and, upon his nomination for HHS Secretary, Price promised that the impending healthcare reform overhaul would bear significant resemblance to his 2015 proposal. We can also look to Price’s 2017 Fiscal Year Budget (FYB) for his philosophy on Medicaid spending.

Some key policy changes from these pieces of proposed legislation that providers should be aware of are highlighted below.

  1. There will be no requirement to have health insurance.

The largest change to healthcare reform that EPFA offers is the removal of the ACA’s individual mandate. EPFA would no longer uphold the requirement that every American have health coverage of some kind or face a tax penalty. However, like the ACA, EPFA still requires insurers to cover all individuals, regardless of health status, often referred to as “guaranteed issue.” Many argue that the concept of guaranteed issue without the individual mandate will cause many healthy or young people to be unwilling to pay the price of the rising premiums in the individual market if they do not have to. This resulting increase in uninsured individuals may adversely affect healthcare systems and providers who are likely to see an increase in emergency care and charity care as a result.

  1. Medicaid expansion would be repealed without replacement.

EPFA significantly cuts eligibility for Medicaid by repealing the ACA’s Medicaid expansion efforts in its entirety. Unlike other Republican ACA reform initiatives, Price’s EPFA does not offer any replacement or alternative mechanism to allow the over 15 million people who enrolled in Medicaid since expansion began in 2014 to remain covered. Those who are no longer eligible for Medicaid when the expansion is repealed can revert to purchasing their own coverage in the individual market. However, the high premiums in the individual market may be too substantial for those just around the poverty line to afford. This is especially likely given EPFA’s tax credit reform; while the ACA determines tax credit eligibility by income, EPFA determines tax credit eligibility by age, giving someone more tax credits the older they become, regardless of income. Therefore, the uninsurance rate is likely to increase, which could result in more emergency room visits and charity care for hospitals and providers.

However, it is worth noting that Trump concurrently named Seema Verma to run the Centers for Medicare and Medicaid (CMS) division of HHS. This is significant because Verma served as a consultant in Vice-President Elect Mike Pence’s state of Indiana to develop Indiana’s Medicaid expansion plan. While Verma’s approach to Medicaid expansion was distinct in that it requires beneficiaries to contribute to the cost of their coverage in health savings accounts, her experience with Medicaid expansion generally may signal that Republicans and Trump are not willing to adopt the repeal of Medicaid expansion portion of EPFA.

  1. Medicaid would be funded as a block grant.

Medicaid block grants give each state a set amount of federal funding for the program on an annual basis. This deviates from the current funding structure, whereby the federal government pays a certain percentage of each Medicaid enrollee’s bill, regardless of how many people are enrolled. Medicaid block grants give the federal government more control over how much it will spend overall, since the grants are determined up front and do not vary based on enrollment. Medicaid block grants also give states more control over how to spend federal funding within the program, and proponents of block grants claim that this increased control would result in increased efficiency in running the programs as well.

Likely, switching to a block grant mechanism would cut overall federal spending on Medicaid. The Congressional Budget Office (CBO) estimates that the block grant in Price’s 2017 FYB would cut Medicaid spending by $1 trillion over a decade. The CBO also estimates that a block grant mechanism would lead to a $7 billion reduction in spending in 2017 but a $169 billion reduction in 2026; that would be equivalent to cutting one third of the program’s budget in 2026. It is difficult to predict how many fewer people would be able to receive Medicaid as a result of that kind of cut. For reference, House Speaker Paul Ryan’s 2012 Medicaid block grant proposal estimated that between 14 and 20 million fewer people would be receiving Medicaid by 2022. While no concrete calculations have been similarly conducted for Price’s 2017 FYB plan, it is safe to assume that an overall cut in Medicaid funding would result in many fewer people on the program who would need to seek health insurance coverage via the individual market or forgo coverage altogether.

Price’s block grant proposal in his 2017 FYB does not detail if any specific groups of people will still automatically qualify for Medicaid, such as pregnant women, or what required benefits must remain, such as primary care. Therefore, it is currently difficult to predict how this change in federal funding would affect health system and health provider reimbursement. However, providers should expect a continued emphasis on efficiency and necessity in delivering care, especially if overall funding for Medicaid programs is cut, since states will have less money to cover certain benefits and inevitably reduce the amount individuals covered, as well.

  1. Medicare quality and payment measures will be updated.

EPFA requires the Secretary of HHS to submit a proposal to Congress detailing a formalized process for the development of performance-based quality measures that could be applied to physicians’ services for Medicare. While EPFA gives no details regarding the proposal’s specific requirements, it does state that the proposal must be in agreement with the Physician Consortium for Performance Improvement and must utilize measures agreed upon by each specialty organization. Additionally, Price voted in favor of the Medicare Access and CHIP Reauthorization Act (MACRA), which put Medicare payment for physician services on the value-based track. However, Price has recently criticized the law’s reporting requirements as too burdensome for physicians and stated the process should be streamlined. Price is likely to continue to delay MACRA’s implementation as a result, to give physicians enough time to be prepared for the new requirements.

Furthermore, while not explicitly outlined in EPFA or his 2017 FYB, Price has been vocal about the direction that the Center for Medicare & Medicaid Innovation (CMMI) has taken payment initiatives. Price wrote a letter to acting CMS Administrator Andrew Slavitt to protest the mandatory bundled-payment model for hip and knee replacements, a proposed Medicare Part B drug payment model and a cardiac bundled-payment model. Price has stated that CMMI has exceeded its authority and should defer more to Congress.

Our healthcare team at NJL will continue to closely monitor the changing landscape of healthcare reform and its impact to our clients. For more information on this subject and how it could impact your healthcare business, contact healthcare attorney Lindsay McLaughlin at 612.305.7739 or or Susan Kratz at 612.305.7699 or

Click here to learn how Tom Price’s HHS Secretary appointment could affect healthcare payors.

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