Consultant: Trump’s choice for HSS, CMS leadership spells trouble for hospitals

With Tom Price leading HHS and Seema Verma at the CMS helm, hospitals should brace for value-based pullback, problems accessing capital.

by Susan Morse, Associate Editor

While healthcare associations are praising President-elect Donald Trump’s picks for top healthcare posts, at least one healthcare consultant claims it is hospitals that will suffer the most under the president-elect’s plans.

Paul Keckley, who works with healthcare executives, said Trump’s election, and new leadership, takes away from hospitals the certainty of moving forward with value-based initiatives such as accountable care organizations that have not shown financial success. For example, only one in three ACOs in Medicare’s Shared Savings program saved money during the third year, Keckley said.

[Also: Tom Price to lead HHS, Seema Verma to lead CMS]

Hospitals may be left holding the debt from patients who have lost their coverage in a replacement plan of the Affordable Care Act, or from employers turning to the retail market for employee insurance when the ban mandating coverage is lifted.

“It can mean hospitals shut their doors,” Keckley said.

On Tuesday, Trump announced longtime Obamacare opponent Rep. Tom Price, R-Georgia, as Secretary of the U.S. Department of Health and Human Services and Seema Verma as head of the Centers for Medicare and Medicaid Services.

Both Price and Verma have connections to Pence. Price is an ally  from their days together in the House.

Verma, who has worked with states to develop Medicaid expansion design, worked with Pence on the Healthy Indiana Plan 2.0.

She has also touted health savings accounts and employment requirements, factors Trump has raised.

The appointments speed along Trump’s and Vice President-elect Mike Pence’s vision not only to replace Obamacare, but possibly do away with some of the value-based incentives Price, an orthopedic surgeon, has said are too onerous for physicians.

The American Medical Association praised the choice of Price.

“Dr. Price has been a leader in the development of health policies to advance patient choice and market-based solutions as well as reduce excessive regulatory burdens that diminish time devoted to patient care and increase costs,” said Patrice A. Harris, MD, chair of the AMA Board of Trustees.

[Also: Reactions pour in on Tom Price pick for HHS secretary]

Most major healthcare organizations lavished praise on Price in statements released Tuesday, but Keckley paints a much less rosy picture.

“The big losers from November 8 on, with repeal a virtual certainty, are hospitals,” Keckley said. “They end up getting the raw end of the deal on doing away with the exchanges. They end up with uncertainly about ACO and bundles they’ve been developing.”

Keckley said healthcare systems are being cautious and are taking a second look at their value-based programs.

“The CFOs are saying to CEO, it’s time to be rethinking our capital commitments, interest rates are going to go up, the cost of borrowing is going up, margins are going down,” he said. “This is not a forward view where the knowns are clear. The only thing they can count on right now is, margins are going to shrink, cost of capital is going to go up.”

[Also: Columnists, media orgs probe concerns over Tom Price, Seema Verma at HHS]

Elements of value-based care will continue, if reengineered, especially those such as bundled payments that have created a substantial savings to Medicare.

Much is unknown, Keckley said, but a prevailing possibility is for Speaker of the House Paul Ryan, R-Wisconsin, and Congress to take back control of value-based programs now run through CMS’s Innovation Center.

However, MACRA is not going away, at least not anytime soon, Keckley said. The 2015 Medicare Access and CHIP Reauthorization Act was put into place outside of the Affordable Care Act, and perhaps more importantly, had bipartisan support as a replacement to the hated sustainable growth rate formula.

“What we’ve learned is the politics of healthcare trumps policy,” he said. “If you do away with alternative payments or slow down value- based purchasing or if you think stage 3 meaningful use, not now, not ever … that puts the market into freefall.”

The appointments are also consistent with the new administration’s view of giving control to the states.

Verma, president and founder of SVC Consultants in Indiana, a national health policy consulting company has worked with states on their own Medicaid expansion. The Healthy Indiana plan requires low-income and non-employed individuals to pay a share of their health cost.

SVC and Verma have developed Medicaid reform programs including waivers for Iowa, Ohio, Kentucky and helped design Tennessee’s coverage expansion proposal and also provided technical assistance to Michigan as they implemented their Medicaid waiver. Verma and SVC also supported Iowa’s Medicaid transition to managed care, according to SVC.

While he sees providers coming out of the transition weaker, insurance companies are going to be stronger, according to Keckley.

Marilyn Tavenner, the president and CEO of America’s Health Insurance Plans who previously helmed CMS, said insurers looked forward to working with both appointees.

“For many years, Dr. Price has been committed to ensuring that patients and consumers are well-served. He will bring a balanced and thoughtful perspective to his role as Secretary of HHS. We look forward to working with him to promote competition, increase choice, and lower costs for every consumer,” she said in a statement.

Twitter: @SusanJMorse

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