Analysis of Affordable Care Act: Expanding coverage holds promise for HME providers

The wild card, says Asela Cuervo: ‘The overall effect of the law on increased access will depend on whether providers are in states that fully implement Medicaid expansion in 2014’
Friday, August 24, 2012

Given the U.S. Supreme Court decision in National Federation of Independent Businesses (NFIB) v. Sebelius, it may be time to revisit the Affordable Care Act (ACA) and its impact on HME providers. Providers are only too aware of the ACA provisions that have already affected their businesses. Others have not yet been fully implemented, such as the requirement for an initial face-to-face visit for orders of certain HME items, which CMS recently published as a proposed rule; or the requirement to have in place a compliance program that meets certain standards to bill the Medicare program. 

The substance of the ACA, however, is health insurance reform with the goal of attaining universal health coverage in the United States. With the Supreme Court decision behind us, it is worth considering whether or not, or how, the prospect of expanded health coverage might impact the bottom lines of providers. The key to expanding coverage under the ACA is the so-called “individual mandate,” a requirement that everyone purchase health insurance or acquire insurance through one of the pathways established by the legislation. These pathways include expanded Medicaid coverage, health insurance exchanges for individuals who do not meet Medicaid eligibility criteria and employer sponsored coverage. The prospect of expanding insurance coverage holds promise for providers even in the face of the reimbursement cuts and administrative burdens imposed by other provisions in the law.

It is worth noting that the constitutional challenge to the ACA was not about health insurance per se, but about the limits of the federal government’s power over individuals and states. This is an important point in analyzing the impact of the law on providers. The court upheld Congress’ authority to enforce the law against individuals by imposing a tax, payable to the Internal Revenue Service, on those who fail to obtain coverage, but limited the government’s power to impose a Medicaid expansion on the states. Essentially, the decision turns what had been a mandate on the states into an option, creating much uncertainty about the impact of the law.

In its analysis of the legislation before it was passed, the Congressional Budget Office (CBO) estimated there would be 16 million more enrollees in Medicaid by 2019. Roughly, 29 million people would purchase their coverage through exchanges, but some of these individuals would have been eligible for insurance from their employers, so not all of the 29 million represented coverage for newly eligible individuals.

In a recent report, CBO analyzed the impact of the NFIB decision on its earlier analysis. Overall, CBO determined that by 2022, there would be 6 million fewer people enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) than it had previously estimated, 3 million more people would be enrolled in exchanges and about 3 million more people would be uninsured. Again, not all the people enrolled in exchanges would be individuals newly eligible for coverage. CBO predicts that some states will choose not to expand coverage and some may eventually expand coverage, but at a slower rate than what is called for under the ACA. 

Thus, the net impact of the law on providers is murky even with the 2014 implementation deadline looming. The overall effect of the law on increased access will depend on whether providers are in states that fully implement Medicaid expansion in 2014, or implement an expansion at a slower rate. Some states may choose not to implement the law at all. The CBO analysis did not look at individual states, so the next 18 months will be crucial for assessing a state’s implementation plan and what effect, if any, it will have on HME businesses. hme

Asela Cuervo is a healthcare attorney based in Washington, D.C. Reach her at