Anyone who’s been paying attention since the November 6 federal elections is aware that President Barack Obama and Republicans in Congress, represented by Speaker of the House of Representatives John Boehner, have been engaged in complex negotiations over the so-called “fiscal cliff”—a shorthand media term for a constellation of effects related to the U.S. federal budget, if action is not taken in Congress by the end of December. Among the issues to be worked out within the federal government are what to do about the expiration of the Bush tax cuts, as well as across-the-board spending cuts set to be triggered by the Budget Control Act of 2011.

One industry leader who has been following the current developments in this rapidly changing situation very closely has been Blair Childs, senior vice president for public affairs at the Charlotte-based Premier healthcare alliance. An exceptionally thoughtful and well-connected advocacy director, Childs has continued to try to educate members of Congress and their staffs about the implications for healthcare providers in the various legislative choices they might make. The Washington, D.C.-based Childs spoke on Dec. 10 with HCI Editor-in-Chief Mark Hagland regarding the latest developments in the current situation, and his perspectives on the implications for healthcare. Below are excerpts from that interview.

What are the latest developments in the “fiscal cliff” negotiations? And what should our readers understand about what’s at stake here?

I think there are very few people in Washington, even in the points of decision-making, who understand all the pieces of legislation that are affected by this fiscal cliff thing. There are smaller things like the Postal Service, that are affected, too. Really, the scope of this is huge.

Blair Childs

Will something get done before the end of  this month/ the end of the year?

It depends on what you mean by “getting something done.” I think something will be done; it’s just a question of how complete an agreement it will be. I don’t think it’s possible that they can get a complete agreement, meaning specific changes to the entitlement programs, specifics having to do with Medicare, Medicaid, other federal programs, by the end of the month. Instead, if they have to get something done, it’s more likely the tax piece that they’ll get worked out.

This morning, Chuck Todd said on the MSNBC network that if some kind of agreement is worked out between the White House and Congress, at least the broad framework of the agreement would have to be hammered out by December 17, in order for the legislative details to be worked out, and for the legislation to be voted on before the year-end recess. What are your thoughts on that assertion?

Yes, when you think about all the tax issues that come into play starting the first of next year, that’s probably pretty accurate. But that’s where I think that perhaps they could get something done on taxes, while deciding at a broad level on, say, x amount of dollars in entitlement reform, and x amount of dollars in domestic spending savings, and x amount of sequestration resolved; and then they could then decide what to do on the AMT [alternative minimum tax], the Bush tax cuts, and the payroll tax questions, leaving it to the committees to work out the details in Congress. There are just so many variables here, it really is mind-boggling.

It’s hard for me to imagine that they could resolve the “doc fix” situation [the ongoing criss over the Medicare program’s sustainable growth rate, or SGR, formula, and ongoing “patches” legislated in order to avert physician reimbursement cuts under the SGR] before January 1. Your thoughts?

They might be able to do a three-month or six-month fix again. But I do think it’s very possible that they might try to fix the SGR formula next year for the long term. I think we’re looking at the next Congress doing about what they did in the last Congress, meaning, not much—fighting over spending and taxes. Now, they might come up with a major framework [on federal spending], and the question is whether they put into that framework, fixing the SGR long-term. And that’s where they might come up with a six-month solution and then ask the committees to report out a bill that creates a long-term fix to the SGR.

One of the things that’s been reported, including by the Washington Post, has been a proposal for further legislation, beyond what’s contained in the Affordable Care Act [ACA], on avoidable readmissions, as one of the possible changes to Medicare. What have you heard?

Yes, I think the area where there’s a real need to focus attention in that area, is in the post-acute care side. And I do think there’s been quite a bit of attention there about, do we need some sort of beefed-up program, most likely for skilled nursing facilities.

That’s what they were referring to in the media reports we’ve seen?

Yes, that’s what most of the discussion is about. The hospitals are obviously already on the hook [for readmissions penalties under the ACA]. The readmissions program [under the ACA] is a flawed policy on a certain level, because for any kind of pay-for-performance program to work, it has to be rewarding or penalizing an organization for something it can control. In the case of the readmissions program, though, one of the major factors affecting patient care organizations is the socioeconomic status of a community. And so we believe you have to segment off from this the population of dual-eligibles [those individuals eligible both for Medicare and Medicaid support]; when you segment them [from the population being analyzed], that’s a fairer proxy. So to be fair, you’d be taking out the hospitals that have high levels of dual-eligible patients.

What other things are you hearing inside the Capitol?

You know, you go and talk to the members of Congress—and I’ve been talking to them in the past few days—and none of them know what’s going on. And these are fairly high-up people. And it’s because this really is a Boehner-Obama conversation [between President Barack Obama and John Boehner, Speaker of the House of Representatives]. And of course, Bohener is talking to McConnell [Mitch McConnell, Senate Minority Leader], and the President is talking to Reed [Harry Reed, Senate Majority Leader], and to a lesser extent, Pelosi [Nancy Pelosi, House Minority Leader]. Last week, I met with someone very senior in the Republican leadership in the House, and he really didn’t know what was going on.

Would you say this is unprecedented?

I would have said in 2011, when they did the sequestration solution  during the debt ceiling standoff, that that was equally unprecedented. And they put together a deal for that, and there was a fallback; and they could even potentially do the same kind of thing here. And if they pitch it to the committees, which I think is very possible, meaning the Congress has to work it out, then we’ll be back in the conflict between the House and Senate.

It just seems as though there’s no way to craft a broad solution to all of this that doesn’t include additional hits to providers. What are your thoughts on that?

I think the easiest cut that legislators can make is a hit to providers. It’s much harder to hit beneficiaries; and the President is very focused on protecting Medicaid expansion. Meanwhile, I don’t know how much of the money in the subsidies to the exchanges might get trimmed; and there’s a lot of money there. There are a lot of places in the ACA where you could find some money. But that becomes a political problem; then again, everything’s a political problem, in this context.

I think the thing that concerns us most is if they do a number of short-term fixes or shortages, such as extending the SGR doc-fix for three months, but then have to come up with a tax reduction or something else within sequestration again, in six months.  Let’s say, for example, that they do a three-month doc fix, and another three-month doc fix, and then another six-month doc fix; with each one of those fixes, they’re going to need to look for revenue [to offset the spending], and each time, hospitals will be vulnerable. And is it a two-, three-, or four-trillion dollar deal to get everything done? And there, they could potentially address the SGR, as well as a variety of other changes, some of which could affect hospitals. Really, the best thing would be if they could reach a deal now; the worst case would be if they took these incremental steps, and hospitals got hit, and then got hit again in the final, longer-term package.

Is there anything people should watch for to happen in the next couple of weeks?

The white smoke from the chimney! [laughs]We all know what issues are on the table for hospitals, and there are any number of potential actions. But there are all these decisions to be made, including what they do about the debt ceiling.

And every hospital should be communicating to their lawmaker now about what these cuts might mean to them.