ACA and the ED - Past, Present and Future - Part II

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Previously, in the first of a 3-part series on health policy and the ED, we discussed the health system’s historical development and climate surrounding the development and implementation of the ACA.  Here, in Part II, we discuss how the ACA has impacted the health care system in general and more specifically the ED. 

THE HERE AND NOW

Central to the implementation of the ACA has been its effects on cost, affordability, and revenue.  In examining these effects, one should analyze certain elements to determine how the complex integration affects the financial well-being of the healthcare system as a whole. 

COST:

As part of the ACA, the health insurance marketplaces (exchange) has been established and administered, with several state-based exceptions, by the federal government.  After a major hiccup in the rollout of healthcare.gov in late 2013, consumers can now shop and compare various plans on the marketplace to determine pricing, affordability, coverage, and related fees.  The marketplaces’ effect on cost and affordability has been varied, depending on the entity involved and the standard of comparison.  Insurers have cited rising costs, prompting many of them to gradually or abruptly exit the exchange in certain states, while others have announced entry into certain state exchanges despite these costs.(1) Conflicting data exists regarding the effect of the marketplace on consumer premiums.  Depending on the “metal plan” or level of coverage and cost sharing, OOP expenses for consumers have seen mixed results.  Despite the reported rising premiums in the marketplace, the percentage increase in premiums has been lower than expected with projected pre-ACA rates, and recent premium increases are presumed by many experts to be a one-time market correction due to the underpricing of plans in initial years.(2)  Additionally, most individuals seeking new coverage on the marketplace qualify for federal subsidies, which lowers the monthly premiums dramatically.  

Figure 1a. National health expenditures per capita, 1960-2023.

Source: kaiser family foundation calculations using nhe data from cms, office of actuary, national health statistics group. http://www.cms.hhs.gov/nationalhealthexpenddata/

National Health Expenditures (NHE) per capita and as a percentage of GDP continue to rise; however it appears that the projected rate of increase will be lower than that seen in previous decades prior to ACA implementation. (Figures 1a and 1b).  CMS projects health spending to increase 5.8% annually until 2025 (4.9% on a per capita basis). Health spending is anticipated to outpace GDP growth over time, leading to an estimated 20.1% of GDP by 2025.  Further, CMS estimates that federal and state governments are estimated to finance 47% of health care spending by 2025 (up from 45% in 2014).(3) 

figure 1b. projections of national health expenditures and their share of gross domestic product, 2013-2023.

source: kaiser family foundation calculations using nhe data from cms, office of actuary, national health statistics group. http://www.cms.hhs.gov/nationalhealthexpenddata/  

With the continued increase in health care spending anticipated to continue, it is worth considering the impact on hospitals and health systems.  As of 2016, it is estimated that there are 20 million fewer uninsured individuals because of the ACA.  In addition to increased access as a result of removing cost barriers,(4) the biggest gains in coverage have been from expanding Medicaid.  This payer shift has, for the most part, led to increased professional and facility revenues for providers, groups, and hospitals.(5,6)   Yet, profitability does seem to vary by acuity, particularly as it pertains to ED visits.  Lower acuity Medicaid visits are relatively more profitable for ED’s than higher acuity visits, and vice versa for private insurers.(7)

figure 2. adoption of state medicaid expansion, october 2016.

source: "status of state action on medicaid expansion decision," kff state health facts, updated october 14, 2016. http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/  

 

Finally, the ACA includes a provision to reduce Disproportionate Share Hospital (DSH) payments, which predominantly affect those institutions providing care to underserved populations.  The anticipated reduction in DSH funding is expected to increase from $1.8 billion in 2017 to $4.4 billion in 2018.(8) Thus, despite the continued expectation of increased reimbursement to EDs and emergency physicians as part of the ACA, the reductions in DSH funding will adversely affect hospital and health system revenue, particularly in those states that chose not to expand Medicaid and serve a significant share of underserved (Figure 2). 

Access:

With the implementation of the ACA, coverage expansion, and reduction in the uninsured population, a significant improvement in health care access has been undertaken.  However, the anticipated impact on various aspects of the health care system has been mixed.  Proponents estimated that by expanding access, this would shift health care utilization away from relatively higher cost acute care (e.g. ED visits) towards primary care and improved chronic disease management.  However, the results have been mixed.  Most of those gaining insurance are shifting from the uninsured population to the Medicaid population, as anticipated.  The impact of health care reform and Medicaid expansion on ED visits is not clear, particularly as ED visits generally rose substantially every year prior to the ACA. Some states, such as Oregon, Tennessee, and Illinois, have seen an increase in ED utilization as a result of insurance expansion(9-11); although Oregon saw the trend reverse when they began coordinating care among their newly insured (i.e. the sort of reforms CMMI is exploring).(12) Some have seen reductions in ED utilization, particularly in certain populations such as young adults.(13)  Further, Massachusetts saw an increase in ED visit rate after their earlier statewide health reform, but not when compared to neighboring non-expansion states, which casts some doubt as to how the ACA may impact ED utilization.(14) As pointed out previously, certain trends continue to exist despite the ACA (Figure 3).  

figure 3. cause, effect, and attribution. 

source: @mdaware

Additionally, it is worth noting that pre-ACA ED visit growth was higher than that of population growth, in the setting of a 12.7% decline in the number of hospital-based EDs between 1991-2011.(8) Additionally, those authors argue that there is a delay in the anticipated change in ED visits after healthcare reform. With the demonstrated and anticipated increase in ED utilization as a result of ACA implementation, the burden is on us in the ED to innovate and transform care delivery systems to improve care coordination, streamline care delivery, and alleviate patient progression barriers. Similarly, hospitals and health systems have changed how they see the ED, with the ED increasingly a hub for not just acute unscheduled care but also specialty care coordination and a replacement for the traditional “direct admission.”(15)

QUALITY

We have seen a dramatic refocus in health care towards quality – reporting, scorecards, pay for performance, and novel payment models.  In the ED, we are on the frontlines – responsible for a majority of hospital admissions and a significant proportion of acute care visits, and we can have a significant impact on the health care system.  We have seen firsthand the effects of value based purchasing (VBP), hospital readmission reduction efforts, and hospital acquired condition reduction measures on care delivery in the ED.  Innumerable, remarkable examples exist of quality programs aimed at integrating care delivery with improved quality outcomes, such as integrated team-based care systems like at Parkland,(16) ACEP’s Emergency Quality Network (E-QUAL), population health management at Partners and others,(17) and the impact of ACOs. 

It is with these demands – access expansion, cost containment, and quality improvement – that we in the ED and on the frontlines are called upon to lead the next generation health care system. Through the ACA, we have seen many remarkable changes in America’s healthcare landscape over the past 6+ years.  It is with a cautious optimism that we look towards an exciting future of healthcare in the US and beyond.

Stay tuned for the third and final installment of this series, at which time we touch on the Cures Act, proposed ACA reforms and replacements with the new administration, and more specifically what we in the ED can do.  Until next time, good night and good luck… 

Post by Dan Axelson, MD, Tim Loftus, MD and Seth Trueger, MD

references

  1. http://epmonthly.com/article/aetna-gone-aca-dead/
  2. https://www.hhs.gov/healthcare/facts-and-features/fact-sheets/aca-working-middle-class-families/index.html.  
  3. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html
  4. Collins SR, Rasmussen PW, Doty MM, & Beutel, S. The rise in health care coverage and affordability since health reform took effect. The Commonwealth Fund 2015;1800(2):1-16. http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2015/jan/1800_collins_biennial_survey_brief.pdf.
  5. Wilson M, Cutler D. Emergency department profits are likely to continue as the affordable care act expands coverage. Health Affairs 2014;33(5):792-799
  6. Galarraga JE, Pines JM. Anticipated changes in reimbursements for US outpatient emergency department encounters after health reform. Ann Emerg Med 2014;63:412-417.
  7. Henneman PL, Nathanson BH, Li H, et al. Is outpatient emergency department care profitable? Hourly contribution margins by insurance for patients discharged from an emergency department. Ann Emerg Med 2014;63:404-411
  8. Medford-Davis LN, Eswaran V, Shah RM, et al. Patient protection and affordable care act’s effect on emergency medicine: a synthesis of the data. Ann Emerg Med 2015;66:496-506. 
  9. Taubman SL, Allen HL, Wright BJ, et al. Medicaid increases emergency department use: evidence from Oregon’s health insurance experiment. Science 2014;343(6168):263-268.
  10. Heavrin BS, Fu R, Han JH, et al. An evaluation of statewide emergency department utilization following Tennessee Medicaid disenrollment. Acad Emerg Med 2011;18:1121-1128.
  11. Dresden SM, Powell ES, Kang R, et al. Increased emergency department use in Illinois after implementation of the Patient Protection and Affordable Care Act. Ann Emerg Med 2016 Aug 17. pii: S0196-0644(16)30304-3. doi: 10.1016/j.annemergmed.2016.06.026.
  12. Early data show Oregon Health Plan shifting from emergency care to primary care and holding down costs. Nov 6, 2013.  www.oregon.gov/oha/news/Documents/2013-1106-metrics-report.pdf
  13. Hernandez-Boussard T, Burns CS, Wang NE, et al. The affordable care act reduces emergency department use by young adults: evidence from three states. Health Affairs 2014;33:1648-1654
  14. Chen C, Scheffler G, Chandra A. Massachusetts’ health care reform and emergency department utilization. NEJM 2011;365:e25.
  15. http://www.rand.org/pubs/research_reports/RR280.html
  16. Chokshi DA, Chang JE, Wilson RM. Health reform and the changing safety net in the United States. NEJM 2016;375(18):1790-1796.
  17. http://www.partners.org/innovation-and-leadership/population-health-management/