The healthcare industry is set to see a dynamic 2020 as the presidential election approaches, with questions about who will challenge President Donald Trump and whether the call for "Medicare for All" — feared by many in the industry — survives the Democratic primaries.
No matter who wins the White House come November, healthcare experts say the push to reimburse providers for value and the aim for greater transparency surrounding prices will keep moving ahead. But uncertainty around the fate of the Affordable Care Act and key legal decisions will linger, including whether HHS can require hospitals to reveal negotiated rates and whether insurers are owed billions in the risk corridor case before the U.S. Supreme Court.
Consolidation is set to continue with deals already underway, though some expect fewer mega deals and more bolt-on acquisitions and regional tie-ups.
Here's a guide to big themes for the year ahead.
Political, legal risks
The legal threat to overturn the ACA, a law deeply intertwined in the U.S. healthcare system, has racked up two wins in the lower courts and now awaits a decision from the nation's highest court on whether its justices will take on the case. If the Supreme Court decides to take it on an expedited timeline, a decision could be rendered before the presidential election, which would ensure the ACA will once again be center stage throughout another campaign season.
It's unclear how the court will rule, "but there is certainly a significant risk" to the law, Dean Ungar, an analyst for Moody's, told Healthcare Dive.
It would disrupt the insurance market and pose a significant problem for insurers with a large presence on the exchanges and in Medicaid expansion states, including Centene and Molina, Moody's analysts said in a recent note.
Alternatively, the high court could wait to hear the case until the next term, which would push the issue past the election and into next year.
At the same time, Democratic challengers who hope to unseat Trump in November pose their own risk to the industry as they tout ideas for reform, though of varying degrees. The most extreme idea is the call to move to a single-payer system, boxing out traditional insurers.
"Any of it would not be good for the insurers," Ungar said of Medicare for All. "The likelihood of that happening is low, very low, but nevertheless it's there."
Other legal question marks include pending cases over whether HHS can force hospitals to reveal the secret, negotiated rates they reach with insurers for services. The legal clash is set to heat up quickly. The judge has the case on an accelerated timeline as the American Hospital Association wants a swift ruling and summary judgment.
The hospitals argue HHS has exceeded its government authority in crafting the rule, which they say violates their First Amendment rights as it would force them to disclose confidential and proprietary information.
Also before the Supreme Court is the question of whether insurers are owed billions in risk corridor payments, a program that was supposed to financially protect insurers who attracted a disproportionate share of sicker patients through the ACA exchanges. A few nonprofit co-ops were driven to close when CMS declared the program had to be budget neutral and therefore only paid out about one-eighth of the expected payments.
Pricing pressure, greater push for transparency
Payers and providers are under increasing pressure to provide heightened transparency into prices as more costs have been shifted to patients through high-deductible plans and as health spending consumes a greater portion of the nation's GDP.
The Trump administration wants providers and payers to publicly reveal the negotiated rates for services, expanding a previous push that required providers to release their chargemaster list, which shows prices for certain services but not necessarily what insurers agree to pay.
The hospital lobby is fiercely opposed to such regulation and filed suit against the final rule.
Regardless, experts say don't expect the push on prices to slow down as regulators and consumers seek to rein in healthcare spending.
"Definitely more [to come] on greater transparency, more requirements and focus on that both in terms of the proposals from CMS and the Trump administration," Rick Gundling, senior VP of the Healthcare Financial Management Association, told Healthcare Dive.
Adding fuel to the transparency push is continued frustration over sky-high surprise bills. Congress zeroed in on the practice last year but never reached a deal for legislation banning it. The issue will no doubt continue into 2020 as it has garnered bipartisan support. The only thing standing in the way is debate over how to craft a legislative solution that will effectively box out surprise bills.
"I will continue to do everything I can to keep surprise medical bills at the top of the congressional priority list until it’s done," Republican Sen. Lamar Alexander of Tennessee said in December. Alexander is also the chairman of the Senate health committee, which has focused on surprise billing.
Still, lawmakers (and payers and providers) have competing ideas on how to fix the problem.
Payers favor rate-setting when out-of-network issues arise and providers support arbitration, a means to dispute the issue with payers with a third-party.
Hearings on surprise billing this year have yet to be scheduled.
The industry is coming off a wave of significant deals, including CVS' buy of Aetna and Cigna's acquisition of Express Scripts as well as provider unions like Advocate-Aurora and Bon Secours Mercy Health.
Mergers and acquisitions will continue as hospitals struggle to overcome a number of headwinds and as both payers and providers seek greater scale for additional leverage. But the pace and size may slow a bit, experts say.
There are few opportunities left for mega deals, Ungar said. "And we know the Justice Department has stepped in in the past when they're too big," he said, referencing the failed deals of Aetna-Humana and Anthem-Cigna.
A recent report from KPMG also predicted a slowdown. Industry experts told Healthcare Dive they expect to see consolidation bring together more regional players.
"Although size and scale alone do not necessarily result in success, further consolidation is a logical outcome given current industry pressures," Fitch Ratings said in a recent research note finding the outlook is stable for nonprofit providers in 2020.
Still, just days into the new year, Molina said it entered into a deal to buy an Illinois Medicaid managed care provider to expand its footprint.
On the provider side, Michigan-based Beaumont Health and Ohio-based Summa Health announced merger plans.
Gundling expects continued consolidation and the rise of major regional players akin to Advocate-Aurora. Healthcare is not as consolidated as other sectors. "We don't really have a national provider across the country," he said.
Hospitals under pressure
Traditional health systems are under intense pressure as their operating model is under threat from the rise in consumerism and the shift in reimbursement.
This rise in the retailization of healthcare is a massive driver of change. "You can't underestimate it," Patrick Pilch, who leads BDO's healthcare advisory practice, told Healthcare Dive.
Health systems operate in an environment now where consumers are accustomed to seamless customer experiences in other sectors. From an app on their phones, consumers can order groceries or a ride to a particular destination, and they have come to expect that packages containing their orders for just about anything will arrive on their doorstep in just two days or sooner thanks to Amazon.
Meanwhile, more healthcare consumers are saddled with high-deductible health plans and are on the hook for more of their care financially, causing them to look for inexpensive modes of care or put off care altogether.
At the same time, providers are being asked to shoulder more risk through value-based arrangement by caring for a certain set of patients and are expected to reach certain targets or risk a financial penalty (or fail to earn a bonus). Though the change has been slow, more value-based arrangements are expected to continue in 2020, experts said.
Payers and providers "that fail to respond to the imperatives of consumerism will risk losing relevance as the move to value-based payment gains traction, while consumer-savvy organizations will be positioned to thrive," HFMA CEO Joseph Fifer said in a recent report.
Nontraditional players have posed the biggest threat to hospitals in the realization of healthcare.
For its part, CVS made a bet on Aetna. Together, CVS believes it can use its pharmacists and retail clinic model to better coordinate and ultimately reduce the cost of care.
Though it's not just CVS and Aetna making bigger strides into the industry. Walmart is also attempting to make access to care quicker and more convenient for consumers who are demanding such changes by opening its own healthcare stores.
For traditional systems, it means patients are being siphoned away from their outpatient facilities.
In an ominous sign for traditional providers, outpatient visits declined for the first time in recent history for many hospitals, according to data with the American Hospital Association.
Ken Kaufman, managing director of Kaufman Hall, told Healthcare Dive hospital CEOs will need to adapt to that change by offering competitive pricing, exploring more virtual care and listening to what patients want.
"What it means is the introduction of a new business model in healthcare, where that new business model is splitting off inpatient from outpatient — so you have numerous competitors who are coming in who are not interested in the inpatient sector at all," he said.