Health Care Ruling Won’t Stop All of Industry’s Changes

NCHC Writer
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Whatever the Supreme Court does on Thursday, there’s no time machine for the health care system.

Legally, a ruling reversing or eviscerating the Affordable Care Act could bring the country back to 2009. But practically, there’s no going back. In the two years since the health care legislation became law, big players in the industry have begun reshaping their business practices, changing their structures, and altering the rules of play in ways that will be difficult to reverse.

Hospitals have begun buying up medical practices and their smaller competitors. Insurance companies have been moving toward new payment paradigms and promising to preserve new consumer protections. State governments have overhauled their Medicaid enrollment systems and insurance oversight. The health care ruling will be consequential in numerous ways, but there is much that the law has set in motion that is likely to outlive it.

“What the Supreme Court does tomorrow could accelerate the move toward a more affordable, more competitive, more efficient health system or could decelerate it,” Larry McNeely, manager of policy, advocacy, and communications at the National Coalition on Health Care, said on Wednesday. “But I wouldn’t say that it’s going to change the direction.”

While implementation of the government-run parts of the health care law are on a long timeline, the health care industry has not waited for the 2014 deadlines to come—or the Supreme Court to issue its decision.

Following the lead of Medicare and existing private pilots, more insurers are tying payment to quality—asking doctors and hospitals to hit certain benchmarks or share in financial risk. Hospitals have begun transitioning to large health care systems. These new models may have been spurred by changes in Medicare payment policy, but contracts have been written and signed, meaning both sides of those deals have begun restructuring for the new reality.

(FULL COVERAGE: The Court’s Health Care Ruling)

Last week, Aetna announced a new partnership with Inova Health System in Northern Virginia, in which the insurer and provider would share profits 50-50. Dr. Charles Kennedy, Aetna’s CEO for accountable-care solutions, said that his company had been working toward new payment models before the law passed, but has seen things speed up since.

The Affordable Care Act “is certainly a significant help in terms of getting organizations to go down that path,” he said. “That said, we have developed strategies where we can make these types of approaches successful even when it’s just Aetna.”

Across the country, hospital mergers have accelerated since 2010, and hospitals have also sped up their purchases of physician practices, leading an increasing number of doctors around the country to become health care system employees. Executives say that these consolidations are necessary to provide more integrated care required by the new payment paradigms. Even if those conditions change, the mergers will be difficult to unravel.

Parts of the insurance industry have also embraced popular consumer protections included in the law. They have not gone so far as to promise that, without a legal requirement, they will take any customer who signs up. But three of the country’s largest private insurers — UnitedHealth, Aetna, and Humana — have said that they would hang onto lower-cost, highly popular provisions, like including young adults on their parents’ family plans and offering preventive services without co-payments.

These benefits are not expensive, but, even so, they were not company policy before the law started requiring them. “The market had not demanded that,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions, who said that the health reform law changed public expectations. “It became a very popular item to add that didn’t cost a lot of money.”

Many states have also been taking action. The health law offered them big grants to help update the computer systems used to enroll residents in Medicaid. Even in the group of states fighting the law, most have taken some money to begin replacing their 30-year-old computers with modern systems that will make it easier to enroll beneficiaries and coordinate with other social-service agencies.

“It’s operational. It’s not political,” said Heather Howard, director of the Health Reform Assistance Network at Princeton University, which is advising 10 states on how to get ready for health reform. Howard said the infrastructure changes will have lasting impact.

States that have embraced the law have gone further, taking steps toward setting up the regulated marketplaces demanded by the law. Several have vowed to move forward with that process, retaining the national law’s framework for insurance sales and regulation, even if the law is reversed.

If the Supreme Court eliminates the entire law, or invalidates key provisions, the decision will reverberate widely. Such a ruling will almost certainly lead to a vast reduction in the number of Americans who will obtain health insurance in 2014. But even if the law is gone, it has created a template that has shaped business strategy and state regulation. Those effects will endure.

“There are a range of market changes that were unleashed by the reform act,” said Dan Mendelson, the CEO of Avalere Health, an industry consultant. “These are all things that will persist, irrespective of the court’s ruling.”