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Regulatory Update

How Health Care’s Regulatory Landscape is Shifting in 2018

Published on 2/7/2018

As the Trump administration closes out its first full year in office and moves into a new year, we’re taking a look at the many updates to U.S. health care policy. From attempts to repeal ACA repeal to naming a new HHS secretary, it has certainly been a busy time in the health care sector.

In this blog post, Cerner’s Meg Marshall discusses the most important policy changes for the health care industry and what they mean for 2018 and beyond. 

The Republican tax bill and ACA’s individual mandate

In December 2017, the Republican tax bill passed and President Trump signed it into law. How does the Affordable Care Act’s (ACA) individual mandate factor into the tax reform bill, and what does that mean for the health care industry?

The tax bill didn’t repeal the individual mandate, which is the ACA’s provision that requires folks who don’t qualify for a hardship exemption to carry a minimum level of health coverage. Technically, it eliminated the penalty for not having health insurance in the year 2019 and onward.

Under ACA, the penalty is either a flat dollar amount, which is $695 for an adult, or 2.5 percent of the household income above a certain threshold – whichever is greater. The tax bill modified that penalty to zero dollars and zero percent in 2019. The Congressional Budget Office (CBO) estimates taxpayers will avoid an estimated $43 billion in penalties they would otherwise pay through 2027. That’s a significant amount.

In all reality, whether we call it eliminating the mandate itself or eliminating the penalty, they essentially have the same effect as eliminating the mandate altogether. This will have some significant effects on the health insurance market, but in general, eliminating the penalty associated with the mandate won’t affect most people. That’s because the majority of Americans receive health coverage through their employer or through a public health program like Medicare, Medicaid or similar. Private individual insurance markets are meant for people who are either self-employed or don’t have access to employer coverage and make too much money to qualify for a safety net program like Medicaid.

For those 22 million individuals who do use the individual market, we expect to see it look very different moving forward. The CBO estimates that repealing the individual mandate will result in 4 million people losing coverage in 2019; that number will eventually grow to 13 million people. This means that many healthy people may voluntarily opt to go without coverage. As a result, insurers may raise their premiums to cover the remaining population who, in all likelihood, will be sicker. These higher premiums could cause more consumers to become priced out of the market. Bipartisan efforts are being made to address the issues with the individual market.

The point of the individual mandate was to make sure not only sick people bought health insurance in those markets. The idea was that by widening insurance risk pools, premiums would go down in the overall market and we wouldn’t have a situation where people only signed up for insurance when they were sick. Without these penalties, the CBO has predicted that wealthier people may choose to forego coverage altogether. In addition, poor people who are medically needy may not sign up for insurance because they don’t have the same sense of urgency to enroll. The CBO predicts that the premiums in the market will spike 10 percent without this individual mandate as the exchanges are left with this sicker consumer pool.

I will note that most people left in the marketplace will continue to receive subsidies, and there’s a chance they’ll be insulated a bit from those premium increases. For the people who don’t receive subsidies, the higher premiums could be very problematic.

What happens next for health care is unclear. Hospitals and health care organizations will likely see fewer patients with insurance coverage. Whether that translates to hospitals having higher dollars in uncompensated care, or perhaps more patients in repeatedly using the emergency department with fewer visits for preventative care, is not clear. What will help us better understand the eventual effects will be what happens next to the remaining revisions in the Affordable Care Act.

Future of the ACA

Republicans were unable to completely repeal and replace the ACA in 2017. What’s next in the repeal/replace conversation, and what does this mean for health care providers?

Right now, we’re seeing a shift in public policy that really represents a philosophical divide in our nation’s culture.

At the core of the ACA was the notion that health care in the United States should be accessible and affordable to everyone, and that the federal government should play a major role in ensuring that. As a result, we saw a more regulated industry with constraints on business practices of insurers and health care providers.

Today, we’re debating bigger questions: Is health care coverage a fundamental right, a privilege or neither? How involved should the government be in health care? What is our role as individuals to be accountable for our own health decisions and lifestyles versus what the government should compel us to do?

Those are big questions. As voters approach the polls this November for midterm elections, these might be the types of things in the back of their minds.

Alex Azar confirmed as HHS secretary

Alex Azar, a former top pharmaceutical and government executive, has just been confirmed as the new secretary of Health and Human Services (HHS). Based on his background, Azar is an interesting choice to head up a $1 trillion department responsible for major health insurance programs, including Obamacare, as well as medical research, food and drug safety and public health. What might we expect from Azar as the new HHS secretary?

I think experience in health care is an obvious asset for the leader of what is arguably the nation’s most important health care agency. President Trump, Republicans and health care industry leaders are impressed with Azar’s background. He led a pharmaceutical company and spent several years in HHS under George W. Bush’s administration. He also helped implement prescription drug benefits and helped establish the Office of the National Coordinator (ONC). I believe he has an expectation and an understanding of what health IT should look like.

Overall, he’s a uniquely experienced individual. He has mentioned that he wants to focus on using Medicare to continue shifting the health system from a fee-for-service model to health outcomes. As a part of that effort, he has mentioned a willingness to support mandatory payment models. Last fall, we saw the administration cancel several mandatory bundle payment systems and roll back the Comprehensive Care for Joint Payment (CJR) bundle payment model. Maybe this signals that he’s not completely on board with the administration’s policy around voluntary programs versus mandatory. He seems willing, once a pilot has been proven and makes sense, to use a little bit more of an aggressive policy lever through Medicare to enact some of those changes.

He has also mentioned addressing opioid abuse. We should expect him to approach this with an eye toward health policy and a very conservative view.

Impact of Cures Act and TEFCA

Obama signed the Cures Act into law at the end of 2016, allocating $10.5 billion with goals of reducing the burdens of providers using electronic health records and advancing interoperability. It’s a hefty act that requires the ONC to facilitate the “trusted exchange” of electronic health information across health care networks. What can you tell us about the Trusted Exchange Framework and Common Agreement (TEFCA) and how it will impact health care providers and health IT companies alike?

21st Century Cures is a huge, sweeping piece of legislation. It contains many provisions related to health IT and interoperability, for example. The prohibition against data blocking is something that we expect soon, and hopefully, we’ll see some clarifying legislation in the coming months.

TEFCA is the most recent regulation that we’ve seen proposed out of ONC. That’s targeting the overall connection of health information exchanges (HIE) through a network of networks. It’s going to create a single “on-ramp” for that HIE. For example, health care providers in Missouri won’t don’t need to worry about their connection in Florida. Rather, they’re going to be focused on their state HIE that connects to Florida. I think providers are excited there’s not going to be a one-to-many connection they’ll have to worry about supporting.

We’ll also see the introduction of health information networks (HIN), entities that would automatically connect and participate in this nationwide HIE. Now we’re seeing TEFCA establish Qualified Health Information Networks (QHIN), which will be that on-ramp vehicle. They’ll facilitate the standard methodology for the HIE connectivity.

The compelling part of TEFCA is that it’s a voluntary program. This indicates that the ONC believes a private sector organization is the best way to facilitate interoperability. Right now, we don’t see any penalties associated with providers for not joining a QHIN, but penalties may come at some point.

Health care regulatory policy in 2018

Looking at 2018, what do you feel are going to be the most prominent health care policy issues facing the industry?

We should expect to see a continued advancement in value-based payment. I think that’s one message that receives bipartisan support across the industry. The days of generating fees-for-service to increase revenue are over.

With the digitization of electronic health care data, we’re going to continue seeing innovations. That’s going to create some interesting challenges. Data access rights, privacy and other related policy needs to be addressed to bridge data and business models from non-health care industries. Each industry has grown up with its own expectations around data access, use and agreements. We will probably see some significant changes happen to HIPAA, for example, to accommodate what we need in the health care space.

There’s a lot on the windshield right now around the ACA and health access insurance coverage. What happens once we get beyond that is not terribly clear. However, we do know this administration is very supportive of innovation efforts by private industries.

How will you stay ahead of the curve with new regulatory requirements? Count on Cerner to lead you through the future of regulatory compliance. Learn more here.