The purposes of this environmental scan are to develop a conceptual framework, review and discuss the major research questions and hypotheses, and identify the “ideal” set of metrics for understanding the effects of the Affordable Care Act (ACA) on safety net hospitals. This report is part of a larger effort by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) to develop a strategy for monitoring safety net hospitals during and after implementation of the ACA. ASPE has contracted with The Center for Studying Health System Change to conduct this environmental scan (the focus of this report) and to prepare separate reports that assess the availability of data sources and metrics for a safety net monitoring effort, as well as a plan for conducting case studies of safety net hospitals.
It is important to monitor the effects of the ACA on safety net hospitals because even after full implementation of the ACA expansions in coverage, there will still be an estimated 31 million uninsured people who will rely on these hospitals for medical care (CBO 2013). The ACA creates both opportunities and challenges for safety net hospitals as they try to adapt to a changing health care marketplace. Health insurance coverage expansions through Medicaid and the state-based marketplaces will increase patient revenues and reduce uncompensated care for hospitals. However, many safety net hospitals are concerned that these gains may not be sufficient to offset reduced revenues through Medicaid and Medicare Disproportionate Share Hospital (DSH) payments, which may affect their ability to care for patients who remain uninsured. Safety net hospitals could also see competition increase as more of their patients become insured and thus have more options to seek health care at other hospitals. Payment and delivery system reforms that emphasize primary care and the clinical and organizational integration of medical care will provide further opportunities and challenges for safety net hospitals.
Drawing on previous safety net monitoring efforts, our own understanding of the ACA and other delivery system reforms, and comments from a technical expert panel (TEP) convened for this project, we present a conceptual framework that describes how health care policy—including the ACA and other state and local policies—affects demand for care, revenue, and the costs of care at safety net hospitals. We also show how contextual factors related to the characteristics of the population in the community, local delivery systems, and unique organizational attributes of hospitals will affect safety net hospitals’ experiences with and responses to health reform. In the second part of this report, we expand on the conceptual framework by discussing the key issues and hypotheses about how the ACA will affect safety net hospitals. This discussion is based on a review of recent research, policy analyses, and commentaries published in peer review journals and by government and private organizations.
The report concludes with a summary of the major research questions and the “ideal” set of metrics that should guide an effort to monitor the effects of the ACA on safety net hospitals.