King v. Burwell: Where Do We Go From Here?

The Supreme Court's decision in King v. Burwell preserves insurance subsidies for an estimated 6.4 million Americans in 34 states. But while a victory for those who could not otherwise obtain insurance, it's just one more step down the very long road our industry needs to walk as we redesign healthcare delivery. In today's post, I'll take a closer look at the King decision and what it means for the future of acute care.

What happened?

In a 6-3 decision, the Court upheld the use of tax credits to assist people purchasing insurance through federally administered health insurance exchanges. These credits are available to individuals and families earning up to 400 percent of the federal poverty line.
The language of the Affordable Care Act (ACA) states that tax credits will be provided to qualified consumers purchasing insurance through "an Exchange established by the State." An IRS ruling interpreted this statement as applying to both federal- and state-run exchanges. However, the King petitioners countered that the wording should be interpreted literally to apply only to state-run exchanges.
The majority in King concluded that Congress intended to improve health insurance markets, not harm them. Barring subsidies to millions of Americans, they wrote, would send individual insurance markets into a "death spiral." They therefore reasoned that Congress intended to extend subsidies to participants in federally administered exchanges.

What does it mean for acute care?

The ACA has now survived two challenges before the Supreme Court and over 50 Congressional votes to repeal. And while much has been made of the partisan bickering surrounding the law, this resistance is neither new nor surprising. Social Security and Medicare both endured years of challenges before being assimilated into the fabric of our society.
That being said, the King decision represents a watershed moment in challenges to the ACA — one that will likely usher in a new era of permanency for the law's programs and mandates. This means we'll see acceleration toward implementation, including:
  • Expanded coverage. States can now be reasonably confident in receiving federal funding for their public insurance programs. This will allow them to invest in exchanges and similar initiatives that extend coverage to more people.
  • Acceleration toward value-based purchasing (VBP). With the ACA here to stay, payers can move more aggressively toward risk-sharing arrangements with providers. Hospitals and physician groups must therefore expedite preparations to participate in bundled payments, ACOs, population health management and other value-based reimbursement programs — or risk being left behind.
  • A shift toward outpatient care delivery. The first A in ACA stands for "affordable" — and an inpatient stay is anything but. To contain cost inflation and capitalize on shared savings arrangements, hospitals need to invest in services that keep all but the most highly acute patients out of the hospital. A pilot program in rural Maryland achieved great results by increasing access to primary care and investing in home visits and social work programs. Other possible solutions include leaner hospitals, specialized regional centers and expanded use of telemedicine for specialist consults.
  • Hospital closures and consolidations. Facing a future with fewer inpatients, health systems are scrambling to create economies of scale. We will also see a more aggressive attempt at capturing newly insured patients. In addition, mergers, physician group purchases and closure of "dead weight" hospitals will likely intensify in the wake of King. (However, in this rush to consolidate, providers are learning that there's more to clinical integration than owning the requisite buildings and service lines.)

What problems still need to be tackled?

While the ACA may be the most sweeping healthcare legislation since Medicare, successful implementation won't fix everything that's wrong with our current system. Here are just a few of the issues providers and consumers still face:
  • Insurance cost and quality. The ACA rightfully put an end to pre-existing condition exclusions and other egregious abuses. However, there's growing concern that many exchange products are of low quality. For the newly insured, narrow networks and high deductibles pose significant barriers to needed care. And rising premiums are burdening middle-income individuals and families who don't qualify for subsidies.
  • Critically limited access to psychiatric care. Patients with mental health and substance use disorders have many forces working against them, few of which are addressed by the ACA. For one, they may be too impaired to secure coverage, even when it's available. During a crisis, these patients tend to head to the ED, where they often face long hours (sometimes days) of waiting for transfer to an inpatient facility.
  • Ongoing uncertainty for EDs. Expanded coverage appears to increase the burden on our already-crowded EDs — but for how long? Anecdotal evidence suggests a temporary influx of newly insured patients who spent years delaying needed care — but should stabilize now that they have coverage. In addition, the experiences of early-adopting states like Massachusetts and Oregon suggest that bump in ED volumes is usually temporary (but may be more persistent in rural areas where physician shortages are most acute).

How can hospitals meet these challenges?

As we move into the post-King era, hospitals and providers are understandably nervous about the coming changes. While it's easy to get hung up on the nuts and bolts of reimbursement and quality metrics, remember that initiatives that benefit patients almost always benefit the organization as well.
With this in mind, here are some suggestions for prioritizing change:
  • Achieve meaningful integration. To succeed under VBP, providers across the hospital must share responsibility for coordinating and delivering each patient's care. This doesn't mean that all physicians should become hospital employees or that all service lines must be staffed by one group. What's most important is partnering with providers who are willing to break down silos and build bridges across the organization. The culture of both the hospital and the contracted physician groups plays a huge role in making this happen.
  • Expand access. One key to succeeding under healthcare reform is to keep patients healthy over the long-term. Investment in outpatient programs that promote prevention, chronic disease management and behavioral health can pay big dividends.       
  • Encourage innovation. The shift to value-based, outpatient care delivery requires outside-the-box thinking. To this end, Vituity formed an innovation committee to evaluate provider-driven project proposals and help to bring the most promising ones to life. (Providers receive a modest bonus if their proposal is selected.)
  • Patient advocacy. Providers and administrators aren't the only ones with change fatigue. Our patients don't have powerful interest groups lobbying on their behalf, and they rely on us to protect their rights. One way to do this is to get involved with the advocacy arm of a professional organization like ACEP, SHM, AAPA or ANA. Last year, advocacy by healthcare professionals helped defeat California's Prop 46, which would have gutted the state's medical tort reform statute with disastrous results for patients. In addition, a group of concerned physicians and hospitals is working to establish a regional psychiatric emergency service for Sacramento County.
Above all, while the King decision has drawn significant media coverage, it's important to remember that the ACA itself is just a small part of healthcare reform. Redesigning our healthcare system will no doubt take many more years, more strategic advocacy and more innovation. And as providers and patient advocates, it's essential that we engage fully in the process while maintaining a strategic long-term perspective.

[Image credit: "SCOTUS ACA 2015 57947" by Ted Eytan licensed under CC BY-SA 2.0]