GOSHEN — Nearly six years have passed since the implementation of the Affordable Care Act, a span that has brought numerous changes to how the business of health is conducted by area health care providers.
On March 23, 2010, President Barack Obama signed the highly controversial bill into law with the goal of initiating comprehensive health insurance reforms aimed at improving access, affordability and quality of health care for the nation’s citizens.
Setting aside politics and drama, what exactly has the ACA’s implementation meant for the business of health care?
Three area health care organizations — IU Health Goshen Hospital, Memorial Hospital of South Bend and Maple City Health Care Center of Goshen — offer perspective on some of the biggest changes, both good and bad.
Pre-existing conditions
According to Dr. James Gingerich of Maple City Health Care, a community health care center located on Goshen’s north side, one of the biggest changes to come across his desk since the ACA, also known as Obamacare, is the provision that insurance companies can no longer exclude someone from obtaining health insurance due to preexisting conditions.
“That is probably one of the least controversial elements of the Affordable Care Act, and yet I think that has had the most profound impact locally,” Gingerich said. “Until that point, insurance companies basically controlled their risk not by managing care, but by managing panels.”
What that means, Gingerich explained, is Insurance providers would keep sick people out of their network or disqualify potential customers for preexisting conditions. It was a method of controlling costs for the insurance companies.
“So the bottom line is, insurance companies really only want to cover healthy people, and they want Medicare and Medicaid to take care of the rest,” Gingerich added. “That’s how they managed risk. Now all of the sudden, the Affordable Care Act comes along, and they can’t manage risk that way. So what to do when you can’t manage risk? You punt.”
Turning to ACOs
That is where the new Accountable Care Organizations, or ACOs, come in.
According to Gingerich, insurance companies have turned to risk-based contracts with providers. This includes Medicaid, Medicare and commercial insurance.
Both hospitals and private practice doctors started forming small associations called Accountable Care Organizations with risk-based contracts with the insurance companies.
“So now, instead of getting paid for every procedure you do like we did in the past, we’re getting paid a flat fee to take care of 1,000 patients,” Gingerich said. “It’s essentially them saying ‘You do it, with good outcomes, and you figure out how to pay for it.’”
Such a change in philosophy resulted in significant growing pains for many health care organizations, as generations of doctors groomed to adhere to the “more is better” philosophy when it comes to expensive tests, such as CAT-scans, are now encouraged to tighten their belts.
Instead of getting more money every time a CAT-scan is ordered, such a test actually eats into profit margins, Gingerich explained.
“Doctors who have been trained by the system to order more and more tests over the last few decades,” he said, “they’re going to drive the hospitals bankrupt.”
Gingerich said IU Health Goshen Hospital CEO Randy Christophel may have summed up the situation best when he surmised that hospitals, which used to be the revenue centers of health care systems, are now the cost centers of the systems because the new model revenues are fixed.
“In light of this,” Gingerich said, “our local hospital is saying that they need a new model that keeps people healthy and keeps them in the community.”
Indirect consequence
That, Gingerich insists, is exactly what Maple City Health Care has been doing since it opened in 1988. The system’s model has been recognized by the Robert Wood Johnson Foundation as one of its exemplar organizations in the country developing a new model for primary care, he pointed out.
For nearly 20 years, Gingerich added, Maple City Health Care has been managing panels of Medicaid patients and saving 40 percent consistently each year.
Faced with this new directive, the hospital approached Maple City Health Care about opening a second site.
“They didn’t want to manage it, because they know that when they manage our kind of population, they always end up having to subsidize it,” Gingerich said. “So they said ‘You guys manage it, but we’ll get you a second site.’”
In May 2015, the center’s second site, located on the former Abshire Mansion property accessed off of north Third Street on Goshen’s north side, was opened to the public.
Gingerich called the Abshire location — which includes the Vista Community Health Center — an “indirect consequence” of the ACA.
“We got a whole second site, the Vista Community Health Center, from the hospital, and we got a 10-year lease for $1 a year to operate that for the community,” Gingerich said. “So it was a huge change for us, and it was all very indirect, but very much connected to and driven by some of the provisions of the Affordable Care Act.”
Medicaid expansion and HIP 2.0
According to Kreg Gruber, president of Memorial Hospital of South Bend, part of the Beacon Health System, perhaps the biggest change for all hospitals and health care providers is the expansion of Medicaid brought about as a result of the ACA.
He’s referring to the ACA provision that provides more federal funds for Medicaid. That means taking previous self-pay patients or those with no health insurance at all and offering expanded Medicaid coverage options.
Indiana held out on the expansion as long as possible as Republican Gov. Mike Pence vowed to fight Obamacare within the state.
Eventually Pence began working with the feds and requested an expansion of the Healthy Indiana Plan, or HIP.
“Essentially,” Gruber explained, “the federal government gave us a waiver allowing us to expand HIP instead of Medicaid.”
Hence the birth of HIP 2.0, which offers access to different types of health care that Indiana residents wouldn’t have had prior to the ACA’s passage. That includes access to physicians, wellness checks, preventative screenings and more.
As a result, the state has seen a significant increase in the number of people who now have some form of health insurance through HIP 2.0.
“So probably locally and across the state, it was the Affordable Care Act that made that possible through some of the negotiations that went on and through the development of HIP 2.0,” Gruber said. “That’s probably the biggest and most important thing I would highlight, and we at Beacon Health, we’re very supportive of that expansion. We believe that to be a good thing.”
Bad policies
Gingerich agreed, but not before pointing out that while more Hoosiers are now insured, it doesn’t mean their new policies are good policies.
“Yes, we’ve seen a lot more patients with insurance, but a lot of them with bad insurance — high deductible insurance,” Gingerich said. “That’s fine for emergency stuff, but it doesn’t keep people doing preventative care, which is really the goal.”
The true savings in health care costs, Gingerich believes, is quality and affordable primary care that deals with prevention and management of acute and chronic disease. It’s about prevention whenever possible rather than reaction to emergency.
“Those are all things that tend to go to deductibles,” Gingerich said. “So, we still find that it’s important to have our sliding fee scale in place so that people who have high deductibles still get up to 90 percent discounts on those deductibles to make sure that they’re coming in and getting care.”
And those bad insurance policies, Gruber said, are also bad for area hospitals, which often must pay more when patients don’t — or can’t afford to — pay their insurance bills because of high deductibles.
“In the past, it was not unusual for someone to have a copay, and maybe a $250 deductible for the year,” Gruber said. “So if you had to go to the doctor’s office, you’d pay up to $250, and after that you’d have a copay of maybe $10 per visit.”
With higher deductible policies, more primary care cost is falling to the patients said Gruber. That has a two-fold effect. First is it could discourage people from seeking preventative, primary care, and second, it could put a financial pinch on those who do. It can also burn the care providers.
“Because of that we’re seeing our write-offs and debt go up,” Gruber said. “An increasing number of people aren’t following through with their repayments, which makes it tough on providers as well.”
As a result, bad debt has been on the rise because patients can’t meet their high deductibles, nor cover the cost of their primary visits, Gruber said. That can lead to “charity care,” where patients meet a level of financial need based on income and a portion of the bill is written off.
“So we’ve seen our bad debt continue to rise,” Gruber said, “and that’s primarily a result of employers trying to reduce their costs.”
Paradigm shift
For Larry Allen, chief medical officer at IU Health Goshen Hospital, one of the biggest changes he personally has seen as a result of the ACA is the creation of the ACOs mentioned by Dr. Gingerich — organizations that he said have resulted in a paradigm shift in how the health care industry does business.
According to the Centers for Medicare & Medicaid Services, ACOs are groups of doctors, hospitals, and other health care providers who come together voluntarily to give coordinated, high quality care to their Medicare patients. The goal is to ensure patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.
An early adopter of the model, Allen said IU Health Goshen formed its own ACO back in 2012, the result of which was a significant change in the hospital’s overall business model.
“It made us look at wellness and prevention in a more intentional way,” Allen said of the change. “We always cared about wellness and prevention, but it used to be you looked at care in a health system as the episode of care.”
Now, Allen explained, the episode of care becomes everything that happened before the patient arrives in order to keep them from having to come back.
“It’s a fundamental change,” he said. “With the Affordable Care Act, the idea of the ACO is to flip the payment model so you’re incentivized to do less, and keep the people healthy. And therefore you get more if you do less. ... I have to say the ACA did drive that in a lot of ways.”
