Are You Prepared for Potential Healthcare Reform?
This is the first of a series of articles exploring the implications of anticipated policy shifts and offers strategies for proactively addressing a rapidly evolving healthcare industry landscape.
The inauguration of a new federal administration often brings significant shifts in healthcare policy. For hospital leaders, understanding these changes is crucial for navigating regulatory adjustments, financial impacts, and operational demands. As the new administration unveils its healthcare agenda, hospital leaders must prepare for reforms that may reshape reimbursement models, workforce management, and technology investments.
President-elect Trump has provided campaign promises and mixed signals related to expanding healthcare coverage, potential changes to the Affordable Care Act (ACA) and reducing costs through value-based care initiatives. Significant aspects of these promises include:
1. Expanding Healthcare Coverage:
President-elect Trump has made broad promises about healthcare, such as “insurance for everybody” and protecting federal programs, such as Medicare or Medicaid. However, these statements conflict with his initial healthcare agenda including rolling back the ACA provisions, reducing government spending on traditional Medicare and Medicaid, and promoting private-sector solutions (i.e., Medicare Advantage). If there is a resultant increase in expanding healthcare coverage for all, healthcare providers should be operationally prepared for the influx of patient volume. If healthcare reform trends towards Trump’s initial healthcare agenda, there may be a tendency towards higher patient billings, more out-of-pocket costs, and fewer options for those to seek healthcare coverage.
2. Potential Changes to the ACA:
President-elect Trump's stance on the ACA has varied over the years. During Trump’s first administration, he supported the proposed American Healthcare Act (AHCA) in 2017, which included provisions to roll back Medicaid expansion, which would have led to millions of individuals lacking healthcare coverage. However, Trump has currently stated that the more effective way to address the ACA is to refine and build upon its framework rather than dismantling it entirely. Some changes may include modifications to essential health benefits, enhancing consumer protections, and streamlining the enrollment processes. An additional concept is that modifications could impact existing gaps in coverage, particularly for middle-income families who struggle to afford premiums without subsidies.
3. Reducing Costs through Value-Based Care Initiatives:
The concept of Value-Based Care (emphasizing quality over quantity) is not new, however there has been reluctance for healthcare providers to shifting from fee-for-service models to value-based care systems. Value-Based Care would reward healthcare providers for improving patient outcomes, reducing hospital readmissions, and ensuring cost-effective treatments. New initiatives may encourage (or require) the adoption of advanced data analytics, integrated care models, and patient-centered approaches to care delivery.
A natural consequence of change is that it provides both challenges and opportunities. As healthcare leaders, you should consider the potential impact of the above healthcare reform initiatives. Examples include:
- Complexities in Reimbursement Processes: An influx of newly insured patients under expanded Medicare or subsidized plans may lead to increased documentation, billing, and coding requirements for providers. Streamlined electronic health records (EHR) systems and interoperability will be critical to addressing these challenges.
- Healthcare Workforce Impact: With greater demand for services, there could be a need for increased investment in workforce training and recruitment to prevent provider burnout and ensure adequate care delivery.
- Stakeholder Collaboration: Success in these initiatives will depend on collaboration between federal agencies, insurers, healthcare providers, and community organizations to implement reforms effectively while minimizing disruption.
As illustrated in the December 2024’s bill to extend funding of the federal government, the political environment, marked by divided government, could delay sweeping reforms. However, regulatory adjustments via executive actions or agency directives are likely.
Proactive monitoring of policy developments is essential. Administrators and CFOs should:
- Stay informed about updates from the Centers for Medicare & Medicaid Services (CMS) and prepare for phased rollout of new policies,
- Carefully evaluate your state legislature’s roe in expanding or contracting Medicaid coverage,
- Communicate regularly with your governing body to discuss potential changes and evaluate their impact on your organization; and
- Collaborate with healthcare consultants, legal advisors, and industry associations to anticipate and develop adaptive strategies.
For more information, or to learn how Microscope can help your organization, please contact:
William N. Wildridge III, CPA - Managing Partner/CEO
