Physicians may have dodged a bullet with the House of Representatives' passage of healthcare reform legislation on Saturday. Instead of tying provider payments to Medicare rates, the public insurance option in HR 3962 requires the government to negotiate with physicians, which could have a big impact on the final levels of reimbursement.
Set aside for a moment the debate over whether or not a public option should be included in the first place. Even among proponents of the public option, there has been disagreement for months about how such a program should be structured and, specifically, how it should pay providers.
Some wanted to tie reimbursement levels to Medicare rates, which, as you already know, often don't cover the costs of care and are generally much lower than rates paid by private insurers. The idea was to keep premiums and costs for the plan low by paying providers a little less, but most physicians weren't too keen on the idea of having more of their payer mix affected by the Sustainable Growth Rate formula and annual payment cuts like the pending 21% reduction set to take effect in January. The AMA and some other physician groups lobbied against this method, and early on it looked like the only concession they had earned from the House was a promise to pay 5% higher than Medicare.
But the thing to keep in mind about the healthcare reform process is that most of the debate over healthcare from July until fairly recently has only been committee work. The public option that physicians thought they were getting in August has turned out different from the public option in the final House bill, and it may still change before all is said and done. The Senate still has to pass its own bill, and then the House and Senate versions will be merged into a final piece of legislation.
At this point, I would say the odds are good that if a public insurance option is included in a final bill, it will retain negotiated payment rates. The House was always expected to produce the more "robust" public option, which would then have to be pared down when it came time to merge with a Senate bill that was expected to contain a more watered-down version, if it included a public plan at all. Now that the House is entering into the final stages with a public plan based on negotiated rates, it's unlikely that the Senate will break character and pass some kind of plan that's tied to Medicare.
So physicians have not only avoided one of their worst fears related to reform, but they may also get a little boost. The bill is expected to cover 96% of the population. While some of the people who are currently showing up at the ED without insurance may end up on Medicaid, which pays even lower than Medicare, some may end up using a public insurance option that will now pay closer to rates established by private payers. Uncompensated care should become rare.
The thing to keep an eye on is the negotiation requirements—this may be how CMS drives payment reform. The legislation states that "the Secretary may utilize innovative payment mechanisms and policies to determine payments for items and services under the public health insurance option." It lists examples like the patient-centered medical home, accountable care organizations, value-based purchasing, bundling of services, differential payment rates, performance- or utilization-based payments, partial capitation, and direct contracting.
Private insurers are already including some of these mechanisms in contracts, and both sectors will probably start adding more quality and performance caveats to contracts in the future. I've talked to many physician groups that leverage quality data to improve their overall rates already, and many private payers are exploring pay for performance and other innovative methods for improving quality and reducing costs.
Sure, there's still a decent chance that the public option doesn't make it through at all. Or if it does, it may be tied to a trigger or opt-out clause that waters it down. But physicians concerned about the financial impact of such an option should take comfort in the fact that whatever makes it through won't likely be tied to Medicare rates.
That's no small victory.
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St. Joseph's Hospital of Elmira, NY, and Guthrie Healthcare System of Sayre, PA, have called off plans to unite the two facilities under the Guthrie banner. The two organizations are still committed to working together, as demonstrated by the number of Guthrie physicians on St. Joseph's staff, St. Joseph's spokesman Denis Sweeney said. However, the organizations have agreed that it's not a good time to merge given the economic climate and "the uncertainty of the reimbursement changes in New York state and Pennsylvania," Sweeney added.
Before the Senate adjourned earlier this week, Majority Leader Harry Reid (D-NV) announced plans that he would bring Senate's version of healthcare reform legislation to the floor next week.
Time will be short as the Senate attempts to unveil the bill and aim for passage and eventually reconciliation with the House bill (HR 3962) within a few weeks. "Our goal is to make sure we get it out of the Senate this year," Sen. Dick Durbin (D-IL), the number two Senate Democrat, said earlier this week.
But any fast actions on the bill may likely run into legislative amendments introduced from the floor that may slow the process as they are debated.
Here's a look at three of the amendments:
Public insurance option. Not surprisingly, the public option will be front and center of the debate. Under the current Senate proposal, the option where states can opt-out of the process appears to be the top version under consideration. And the House bill has a different version requiring the Health and Human Services secretary to negotiate rates with healthcare providers as private insurers.
In this debate, attention has focused on senators, such as Joseph Lieberman (I-CT), who usually votes with the Democrats and has said he won't support any public option, or others such as Sen. Blanche Lincoln (D-AR), a Finance Committee member who has remained quiet on the issue. Their support is needed to reach the magic number (60) needed to pass legislation in the Senate. But attention also needs to be paid to moderates, such as Sen. Jay Rockefeller (D-WV) or Sen. Sherrod Brown (D-OH), who say they would not vote for a bill without the option.
Again, the "trigger plan" suggested earlier by Sen. Olympia Snowe (R ME)—which would feature nonprofit agencies offering health insurance in instances in which private insurers could not cover 95% of the people in their regions—could make an appearance. But it may be hard to appease that core of senators who are demanding an actual option.
"Pay or play." In July, the Senate Health, Education, Labor and Pensions Committee passed a package that included a "play or pay amendment," in which employers would pay an annual fee for individuals not covered by a health insurance plan.
In September, Sen. John Kerry (D-MA) introduced an amendment that would impose a similar fee on employers not offering healthcare coverage to the legislation pending in the Finance Committee; however, he withdrew it. He planned to reintroduce this amendment on the floor.
Under his proposal, employers with at least 26 employees would have to pay an annual fee of $750 for each full time employee and $375 for each part time employee not covered by a health insurance plan. At the time, he said many employers could terminate healthcare coverage without an employer mandate and that the amendment would help to keep employers in the healthcare financing system.
Individual responsibility. In the current House bill, individuals will be responsible for obtaining and maintaining health insurance coverage. Those who decide not to obtain coverage would pay a penalty capped at 2.5% of modified adjusted gross income above a specified level.
This issue, though, has triggered responses in both chambers about penalizing those who may have difficulty affording insurance in the first place—and that debate is likely to emerge again in the Senate.
Where, exactly, will the $420 billion to $440 billion in health savings from Medicare suggested in the Senate and House proposals respectively, come from over the next 10 years? And how can the nation keep high U.S. healthcare spending from continuing its upward trajectory?
The short answer, according to Elizabeth A. McGlynn and three research colleagues from RAND Health in Santa Monica, CA, is that those issues are not addressed in the current policy discussion in Congress.
Unfortunately, McGlynn said most of the focus for cost containment has been on the public sector. "We think it is useful to consider the cost-control options available to both the public and the private sectors," she and her colleagues wrote.
Here's what has to happen. The nation must hold down health spending to the rate of growth in the gross domestic product, thereby keeping a fixed percentage of national income for healthcare.
To do this, she and her colleagues wrote, "spending on healthcare over the next decade would have to be reduced by 6.2% from the amount the Centers for Medicare and Medicaid Services estimates the country would otherwise spend."
"You can think about it as not getting a wage increase, but you take that money and use it for bonuses for quality performance instead," she says.
The RAND researchers examined 12 policy options for reducing healthcare spending in Massachusetts. In their article, they took eight options "that evidence suggests have the potential to reduce spending and are broadly applicable to the U.S."
They are:
1. Using bundled payments for six chronic conditions and four acute conditions or procedures requiring hospitalization, national healthcare spending could be reduced by 5.4% between 2010 and 2019.
This assumes providers can achieve a reduction of 25% to 50% in costs of complications through more collaborative, follow-up care that prevents errors and avoidable readmissions. The Congressional Budget Office estimates that with bundling in Medicare and Medicaid alone, savings would amount to $19 billion.
"We find that there would be greater opportunities in bundling payments for the treatment of chronic diseases and in applying the model to all payers," the RAND researchers wrote.
2. Apply an all-payer hospital rate, which would be established by a regulatory authority. The authority would set prices for hospital services for all private and public payers. This has the potential of lowering costs by 2%.
3. Accelerate the development of health information technology, which has great potential to dramatically reduce the duplication and inefficiency that encumber the delivery of care. This could reduce costs by 1.5% or it could increase them by .8%.
4. While there is some evidence disease management programs may not be cost-effective, and in fact may increase costs by 1%, done properly they also have the possibility of decreasing costs by 1.3%.
5. Create medical home models, where patients and their families have a relationship with their physicians. This could reduce costs by 1.2% or it could raise costs by .4%.
6. Expand the number of retail clinics as an alternative to urgent care centers or the emergency room. This could reduce costs by .6%.
7. Expand primary care capacity, increasing the use of less expensive physician assistants and nurse practitioners. This could reduce costs by .5%.
8. Change the design of insurance benefits to reduce drug copayments for patients with certain chronic diseases when studies show those high prices may be an impediment to prescription adherence. This strategy could result in decreasing costs by .3% or it could increase costs by .2%.
Most of these strategies, the authors wrote, would require major policy shifts and they are not sure whether Congress and stakeholders have the political will to tackle the issues.
However, they wrote, "It is possible to reduce spending on healthcare services, although numerous political and implementation barriers stand between these policies and actual savings."
The fight over the future of the U.S. healthcare system is heading outside of Washington, DC, as groups on all sides take advantage of Congress's Veterans Day recess to put pressure on lawmakers, the Wall Street Journal reports. Conservative groups are using the recess—one week for the House and three days for the Senate—to press lawmakers to vote no on the healthcare overhaul plans. Groups in favor of the Democratic health plan are equally active, the Journal reports.
A cardiologist at Burlington, MA-based Lahey Clinic said he was fired for resisting pressure from two top physicians at the hospital to use stents made by device giant Medtronic Inc., even though the company's stents might not have been best for some patients. David Gossman, MD, who worked at Lahey for more than 20 years, alleged in a lawsuit that the two doctors pressed him and other cardiologists to use Medtronic stents, because they believed if the hospital increased its use of the product Medtronic would let Lahey participate in clinical trials for a new heart valve. A Lahey spokesman told the Boston Globe the hospital's corporate compliance department investigated the allegations and found them to be "totally groundless."
After trying to carefully balance their interests in healthcare reform and immigration, the nation's Hispanic lawmakers and largest advocacy groups are scrambling to develop a strategy to counter what they see as efforts to shortchange immigrants in health bills on Capitol Hill, the Washington Post reports. Many of them believe that a healthcare overhaul is vital to their community, which is disproportionately uninsured and suffers from a host of chronic illnesses, the Post reports. Under the health bill passed in the House on Saturday, illegal immigrants would be allowed to buy insurance on a newly created exchange with their own money and without government subsidies.
The Fulton-DeKalb Hospital Authority was essentially pushed aside when officials at Atlanta-based Grady Memorial Hospital signed the agreement that created a new corporate board early last year. In recent weeks, however, the authority has become Grady's chief communicator on money issues with the Fulton County Commission, the Atlanta Journal-Constitution reports. The Fulton commission provides about $80 million a year toward Grady's approximately $650 million budget. And as tension has mounted between the Fulton County Commission and Grady's corporate board, commissioners have used the opportunity to largely bypass the corporation in favor of the more familiar authority, according to this article from the Journal-Constitution.
The Texas-based JPS Health Network may stop participating in certain tax breaks for economic development because JPS board members say it is unclear whether those projects benefit the public hospital system or simply add more burden. The hospital board's finance committee approved a proposal to not participate in tax increment financing districts, and to pass its right to vote on them to Tarrant County commissioners, who already have final say. JPS officials have been working on a policy that would limit the network's participation in the districts. Officials' main concern is that the districts lead to population growth and increased demand on JPS hospitals and clinics.
Tampa General Hospital paid $4.8 million for three pieces of property, where it intends to move office staff to open up space at the facility. The hospital plans to move some of its non-medical support office staff to the recently acquired building in about a year, said a spokesman, and vacated hospital space will be remodeled to house patients. The hospital is licensed for 988 beds.
