Where Is Health Care Reform Headed?

Written by on November 1, 2011 in Law & Finance - No comments
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By Kimberly Licata

President Obama signed the Patient Protection and Affordable Care Act (“P-PACA”) almost 18 months ago in March 2010. Many articles have been written. Many more opinions have been shared. Congress continues to debate health reform, while health care and the economy are taking center stage in the upcoming elections. Where is health care reform today and what has the government being doing this summer?

Answer: Payment reform and quality incentives continue to be the direction in which health care reform is headed.

In spite of the ongoing constitutional challenges to P-PACA in the federal court system, the federal government spent its summer continuing to implement health care reform through various agencies. The most recent changes have included:

  • The Center for Medicare and Medicaid Innovation (“Innovation Center”) announcing the Bundled Payments for Care Improvement Initiative. Under this program, providers can apply to participate in certain bundled payment programs ranging from a payment bundled for an episode of care defined alternatively to include: (i) all inpatient acute care, (ii) all inpatient acute care and post-acute care, (iii) post-acute care only, or (iv) a prospective bundled payment for inpatient care. Applying providers have some flexibility depending on which initiative they want to participate.
  • The Internal Revenue Service (“IRS”) issuing news release IR-2011-90 to encourage small employers and professional service providers to review the new Small Business Health Care Tax Credit to see if the tax credit applies to them.
  • Health and Human Services (“HHS”) announcing a joint state-federal review of double digit health insurance rate increases, which includes the creation of consumer-friendly insurance information on the website HealthCare.gov relating to proposed rate increases.
  • The Centers for Medicare and Medicaid Services (“CMS”) published multiple final rules, including on the hospital value-based purchasing program (Aug. 18, 2011), quality reporting program for long-term care hospitals (Aug. 18, 2011), hospital readmission reduction program (Aug. 18, 2011), quality reporting for hospices (Aug. 4, 2011) and for inpatient rehabilitation facilities (Aug. 5, 2011), as well as the hospice face-to-face requirement (Aug. 4, 2011).

These recent actions demonstrate the federal government’s commitment to achieve increased transparency between payors, providers, and consumers, to incentivize changes through bonus payments or tax credits, and to implement substantial payment reform. Unfortunately, P-PACA was a highly partisan effort and the fallout from this has been significant in terms of understanding and expectations. Consumers have expressed mixed emotions on health care reform; most recognize that change is necessary, even inevitable. Providers and insurers have viewed health care reform both as an opportunity to be incentivized to be cost-efficient and cost-effective and yet as a likely loss of revenue over time.

Under P-PACA, health care reform attempts to change fundamentally how health care services are provided by health care providers by shifting the focus from reimbursement based on the quantity of services provided to reimbursement on the basis of the quality of the services provided. Payment reform takes two primary forms in P-PACA: bundled or value-based payments and accountable care. The first is bundled or value-based payments. By aligning caregivers and providers with a financial interest in working together and managing costs through a single payment, the government hopes that bundled payments will help shift the focus to quality care. Bundled payments and its kin are insurance and reimbursement based efforts to shift payment. In contrast (but to the same end), the second payment reform is through accountable care. Accountable care is intended to be a patient-centered approach to deliver coordinated care to improve quality and reduce the total cost of care for a defined patient population. Accountable care requires buy-in from providers and patients and coordination among all involved in care delivery.

P-PACA’s lack of focus on the role of the consumer, aka the patient, in driving health care costs has been considered a significant weakness of the current health care reform efforts. Most if not all recognize patient access to care and health care information to be very important. Notwithstanding this, for system-wide changes to occur and “stick,” health care reform is dependent on buy-in from insurers, providers, and consumers with each bearing some responsibility in the process. The government continues to encourage a dialogue between insurers, providers, and consumers through regulations, websites, even “town hall” or open forum discussions.

Most agree that our health care system needs an overhaul. Consumers feel they are overcharged, while providers frequently complain about operating in the red. The last 18 months of reform have made changes to the system with many more to come. The next few years promise to provide us all with a wild ride. Stay tuned and hold onto your hat!

Kimberley Licata
is an attorney at Poyner Spruill, who practices health law and participates in the Firm’s Health Law Section, Emerging Technologies team, and Privacy and Information Security team. She may be reached at klicata@poynerspruill.com or 919-783-2949. These comments are not intended to establish an attorney-client relationship and are not intended to be legal advice.

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