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PA OPINION

Helping providers understand the potential impact of the AHCA (American Health Care Act)

Note: this is Part 4 in our post-election series, Navigating Uncertainty: Part 1 , Part 2, and  Part 3.

On March 6, Congressional Republicans released the American Health Care Act (AHCA), the much anticipated response to the Affordable Care Act (ACA). Responses to the proposed legislation have been swift and demonstrate the significant hurdles this reconciliation bill will need to overcome to become law, such as the Congressional Budget Office’s (CBO) estimate that 14 million Americans could lose coverage in 2018.

While much of the analysis to date has focused on the impact to insurers, average premiums and the number of people who will be covered, there are also profound impacts to providers. Below are the key effects of the legislation providers need to be aware of:

The shift towards value based care does not go away.

The AHCA contains no provisions that affect MACRA or MIPS. Provider executives therefore need to continue to invest in technology and process redesign to support the transition to value based care.

Uncompensated care will increase.

The Congressional Budget Office has estimated that under the AHCA, 14 million Americans would lose coverage in 2018 and that number would increase to 24 million by 2026. This would mark a return to the levels of uninsured people seen before the passage of the Affordable Care Act and it is therefore realistic to expect that providers will see similar levels of uncompensated care.

Fewer people will follow the advice of their physicians.

As a result of reduced coverage, more people will chose to not act on all of the advice they receive from their physicians and may delay or refuse to receive needed medications, diagnostic tests and follow up visits. For providers that are measured on quality metrics, this may result in a lower quality score and reduced reimbursement due to lack of patient follow through.

State level reimbursement will decrease.

To maintain current levels of reimbursement, states will need to come up with $370B in additional funding over the next 10 years to offset the planned cuts in Medicaid. It’s not likely that states will be able to fully meet this funding gap which means that provider reimbursements will decrease.

Providers will find it more difficult to make needed investments.

Declining reimbursement and increasing costs will squeeze provider margins, making it harder to sustain current operations and grow investments in new tools and capabilities such as data analytics and precision medicine that are essential to continue to make meaningful improvements in longevity and quality of life.

Consumerism is here to stay.

These changes will accelerate the trend towards consumerism with patients demanding increased price transparency and price shopping.

Although the path forward for the bill is relatively clear in the short term, the AHCA is not likely to pass in its current form. A number of Republican senators have expressed concerns regarding the AHCA and there is significant opposition from both the left and the right. Given the doubts expressed, it is unlikely that in its current form the bill will find a majority in the Senate. Congressional leaders have indicated that the AHCA will go for a vote in the House of Representatives the week of March 20. We expect that the bill will pass in the House but will not pass in its current form in the Senate.

Regardless of the uncertainty surrounding the legislation, the path forward for providers is clear. Providers must continue preparing for value based care by making the needed investments in technology and process improvement and must also continue to focus on increasing operational efficiency to sustain their business in a future scenario where revenues will continue to face strong headwinds.

To speak to one of our experts about the impact the American Health Care Act could have on your organization, get in touch today.

Contact the authors

  • Mark Summers

    Mark Summers

    PA healthcare expert

    Mark has extensive experience helping healthcare organizations develop and implement winning business strategies

    Insights by Mark Summers
  • Nilesh Chandra

    Nilesh Chandra

    PA healthcare expert

    Nilesh is a leader in PA's healthcare business focused on helping provider industry clients develop new business models for an industry shifting towards value-based payments.

    Insights by Nilesh Chandra

Contact the healthcare team

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