Under the Patient Protection and Affordable Care Act (ACA), 32 states (including Washington, D.C.) expanded Medicaid and millions of individuals gained coverage through health insurance exchanges. Provisions in the ACA also supported delivery system reform with a strong focus on proactive, community-based care. For safety-net providers — those that by mission or mandate see all patients, regardless of their ability to pay — these two policy objectives are closely linked: progress on delivery system reform is maximized when it stands on the shoulders of coverage expansion.
Coverage Expansion Enables Key Safety Net Improvements
Delivery system reform, such as better coordinating the care of high-need patients, frequently requires up-front investments in staff and information technology. For safety-net institutions, such capital resources are often scarce. One reason is that revenue from insured patients must be used to cross-subsidize the care of uninsured patients. For example, in New York City, about 80% of all uninsured ambulatory care visits in 2014 took place at NYC Health + Hospitals, the largest safety-net health system in the country on the basis of visit volume. Although NYC Health + Hospitals comprises 11 of the 61 hospitals across New York City, approximately half of all uninsured emergency department (ED) visits and hospital stays in 2014 occurred within in our system.
In addition to requiring additional financial resources, many delivery system reforms also depend on active patient engagement in consistent, high-value care. Yet, patients who lack insurance often forego interactions with the health care system until an ED visit or inpatient stay is unavoidable.
The ACA’s health insurance expansion was an important inflection point in this narrative. The expansion provided financial security not only to newly covered individuals (who could more affordably seek primary and specialty care), but also to safety-net providers (which could use the increased revenue from newly insured patients to expand access and to pilot innovative care models).
The results have been striking: recent studies have demonstrated that the ACA’s Medicaid expansion increased the volume of overall and mental health visits at federally funded community health centers, improved the quality of care delivered at those facilities, and reduced out-of-pocket spending for low-income patients. Payment reforms in the ACA (e.g., bundled payments and accountable care organizations) worked in tandem with coverage expansion, providing further impetus for meaningful health system innovation by incentivizing providers to improve the quality of care while controlling costs.
However, this initial progress is still fragile, and further progress will depend on keeping the ACA’s health insurance expansion in place. Twenty-one major health systems recently issued a consensus statement asserting that “Repealing the ACA without a replacement plan in place that keeps people covered with affordable, high-quality insurance will severely disrupt important progress in improving the quality and reducing the cost of care.” Because safety-net systems receive substantial Medicare and Medicaid payments, grants, and federal and local government subsidies, expanding the delivery of high-value care is particularly important for the sound management of taxpayer-funded health care expenditures.
Coverage Expansion in the Safety Net
We recently assessed the insurance status of the NYC Health + Hospitals patient population during the period of the ACA coverage expansion. We categorized the insurance status of unique patients by month from January 2013 to January 2017 across different care settings. Across our system (exclusive of our skilled nursing facilities), the percentage of adult patients who were uninsured declined from 34.2% in January 2014 to 29.7% in January 2015, a decrease that was sustained through January 2017 (30.1%) (data not shown). A similar result was observed in ambulatory care, with a 4.1-point decline from January 2014 to January 2015 that was largely maintained through January 2017, during which time both Medicaid and commercial insurance rates rose.
The proportion of uninsured patients visiting our EDs fell by 6.0 points from January 2014 to January 2015; this downward trend continued through January 2017. Simultaneously, the percentage of Medicaid patients (including Medicaid Managed Care patients) in the ED rose 4.7 points from January 2014 to January 2015. The percentage of commercially insured ED patients also increased slightly during the ACA implementation period.
While the conclusions that we can draw from these data are limited, a number of factors likely drove these changes: increased insurance coverage of previously uninsured NYC Health + Hospitals patients, decreased volume of uninsured patients as they gained insurance and sought care outside of our system, and increased engagement with newly insured patients who had previously avoided the health care system entirely.
The changes in our safety-net system reflected state and local shifts, resulting in a cumulative 5.5% decline in the uninsured rate in New York State between 2013 and 2016. Beginning in 2014, New York State modestly expanded Medicaid eligibility (from 100% to 138% of the federal poverty level) and launched the New York State health insurance marketplace. At the same time, under Mayor Bill de Blasio, New York City led a major push to enroll the uninsured into coverage.
Nationally, changes in the percentage of uninsured patients treated by safety-net providers were even more pronounced, at least in certain states. States that elected to expand Medicaid and set up exchanges often saw significant declines in uninsured rates, such as 13.1-point decreases in Kentucky and West Virginia. Medicaid expansion also appears to have substantially reduced the uncompensated care burdens of hospitals in expansion states, with hospitals that care for the highest proportion of low-income and uninsured patients seeing the largest reductions in uncompensated care post-expansion.
Care Transformation in Action
Maintaining — and optimally, growing — our insured population is crucial to taking care of those who are still uninsured, but it also is important for our system’s transformation efforts. For instance, expanding access to high-quality primary care, with integrated behavioral health services, is a linchpin of delivery system improvement. But hiring more primary care clinicians, launching collaborative care programs, and establishing linkages between hospitals and community health centers all require capital investment.
Some safety-net systems already have begun to put resources into these efforts. For example, as the number of Medicaid patients visiting Denver Health nearly doubled between 2010 and 2015, the system was able to hire mental health specialists who could be directly embedded in primary care. Because the ACA’s coverage expansion enabled many patients to access these kinds of expanded services for the first time, utilization of these services rose substantially: between 2013 and 2015, Denver Health medical visits increased 17% and mental health visits almost doubled, while ER visits only rose by 4% between 2013 and 2016.
In New York State, the modest coverage expansion has recently begun to facilitate this kind of transformation in the safety net (concomitant with resources made available through a Medicaid waiver known as the Delivery System Reform Incentive Payment [DSRIP] program). Initiatives similar to DSRIP have spurred a rethinking of how to organize safety-net providers, often driven by the common goal of reducing avoidable hospital and emergency department utilization.
An example from our own system is a program to embed care management in the ED, where many patients, particularly uninsured patients, initially seek care. Supported by a grant from the Center for Medicare & Medicaid Innovation, itself funded through the ACA, our system has started to develop approaches to more proactively meet the needs of patients, usually outside of acute care settings. An ED-based team of a registered nurse (RN) care manager, a community health worker, a pharmacist, a home care nurse, and a physician collaborate to enroll eligible patients in the program, to avert inpatient admissions when it is safe to do so, and to link patients to primary care when appropriate. While patients are eligible for the program regardless of insurance status, increased insurance coverage has helped to position the program for success. Patients who are insured have broader access to community-based primary care, and increased revenue from insured patients is likely to be a key source of funding for continuing a similar program after the grant’s conclusion.
Potential Policy Changes Threaten Care Transformation
Many safety-net systems already face financial uncertainty that could imperil the success of these newly implemented transformation initiatives. Along with Medicaid reimbursement, supplemental payments for indigent care, such as Disproportionate Share Hospital (DSH) funding and Upper Payment Limit (UPL) payments, are a major funding source for safety-net health systems. For NYC Health + Hospitals, federal and state funding for indigent care is projected to drop from $2.2 billion in 2016 to $1.0 billion in 2020.
Although their political fate is uncertain, Republican proposals to repeal and replace the ACA would deepen this challenge, rolling back coverage expansions nationally, with potentially catastrophic consequences for safety-net health systems. The American Health Care Act (AHCA), recently passed by the U.S. House of Representatives, would cut $834 billion in funding for Medicaid while increasing the number of uninsured people by 23 million between 2017 and 2026, according to the Congressional Budget Office. In addition, the AHCA leaves Medicaid DSH payment reductions in place until 2020 for Medicaid expansion states like New York and does not restore Medicare supplemental payments. If a similar proposal were to become law, safety-net health systems like ours would simultaneously face worsening budget deficits while caring for a surging number of uninsured patients.
With most safety-net systems reporting slim or negative operating margins, revenue from a greater proportion of insured patients is often a necessary condition for consequential reform. Conversely, losing that source of income could endanger still-nascent restructuring while flooding the same systems with new uninsured patients. Until universal health coverage is a reality in the United States, supporting delivery system transformation in the safety net should be a critical element of both Republican and Democratic visions for health reform.
The views expressed here are those of the authors and do not necessarily reflect those of NYC Health + Hospitals.
This article originally appeared in NEJM Catalyst on June 22, 2017.