Posted on March 29, 2010 by Doug Hastings

The Timeline for Accountable Care

Now that we have sweeping new health care legislation, the Patient Protection and Affordable Care Act ("the Act"), let's look at the rollout of the accountable care provisions--i.e., those changes to the payment and delivery system that hold the most long-term promise of improving quality and cost-efficiency. They are discussed in my most recent article: "The Timeline for Accountable Care: The Rollout of the Payment and Delivery Reform Provisions in the Patient Protection and Affordable Care Act and the Implications for Accountable Care Organizations," published last week in the BNA's Health Law Reporter.  Click here to read the full article (PDF).

 

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Posted on February 19, 2010 by Doug Hastings

Payment and Delivery System Reform - It's Only a Matter of Time

In my most recent article in the series I have been writing for the BNA's Health Law Reporter on payment and delivery system reform, accountable care organizations and bundled payments, I comment on where things are now that federal reform has stalled. The article, titled "Payment and Delivery System Reform: It's Only a Matter of Time," argues that changes in payment and delivery are on the horizon regardless of the pace of federal reform and that providers (and payers as well) should continue their efforts toward accountable care to meet the cost and quality challenges that are no less daunting today than they were a month ago. Please click here to view. I hope you find it of interest.

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Posted on September 18, 2009 by Doug Hastings

Health Care Delivery System Reform Provisions in the Baucus Bill

In addition to the many hotly contested insurance and access-related provisions in the America's Healthy Future Act of 2009, the Chairman's Mark from Senator Baucus on behalf of the Senate Committee on Finance, released Wednesday, there is in the bill a section that addresses in a substantive way reform of the health care delivery system with a focus on quality.  Much of the underlying thinking in Title III of the bill, entitled "Improving the Quality and Efficiency of Health Care," draws from the Institute of Medicine's seminal publication in 2001 of Crossing the Quality Chasm.  Especially in Subtitle A, "Transforming the Health Care Delivery System" (pages 75 to 110), one can see the impact of the IOM's definition of quality as six aims: care that is safe, effective, efficient, patient-centered, equitable and timely. As a current member of the IOM's Board on Health Care Services, I am gratified to see these ideas captured in important proposed legislation.

In Title III, there are the following key provisions with important long-term implications for health care providers:

·         A hospital value-based purchasing program in Medicare that moves beyond pay-for-reporting on quality measures to paying for hospitals' actual performance on those measures;

·         A charge to the Secretary of HHS to establish a national quality improvement strategy, which would, among other things, address improvements in patient safety, health outcomes, disparities, effectiveness, efficiency and patient-centeredness;

·         Recognition of Accountable Care Organizations, which, beginning in 2012, would be allowed to qualify for incentive bonus payments; among other requirements, an ACO would have to have a formal legal structure to allow it to receive bonuses and distribute them to participating providers;

·         Formation at CMS of an Innovation Center that would be required to test and evaluate patient-centered delivery and payment models;

·         The establishment of a bundled payment pilot program involving multiple providers to cover costs across the continuum of care and entire episodes of care; if the pilot is successful, it would be made a permanent part of the Medicare program;

·         Beginning in 2013, reductions in Medicare payments to hospitals with preventable readmissions above a threshold based on appropriate evidence-based measures.

There is much more content in Title III, but the above gives a flavor.  If passed, these sorts of provisions can help advance the quality of our delivery system enormously.  I think that they have bipartisan support.  And I think they have a chance of surviving any final bill that might get passed. If so, a period of expedited innovation, clinical integration and sharing of best practices in quality health care realistically could result. We may look back in several years at this Fall of 2009 as a moment of transformation in our delivery system.

Click here to see a copy of my article published in the BNA Health Law Reporter.

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Posted on May 29, 2009 by Doug Hastings

Delivery System Reform - Will It Happen?

Although there are some big issues that remain unresolved, such as the "public plan" component, it appears that we will see reform legislation pass in 2009. Drafts of the legislation are being prepared now by various members of Congress and their staffs.

The focus on medical homes, physician hospital organizations and accountable care organizations is very real, as is the focus on payment reform, including bundled payments and other forms of capitation-like reimbursement. A key element of the debate relates to "how integrated" a provider organization will need to be to qualify for bundled payments. Can it be virtual? Can it be physician only or must a hospital be involved? What should be the role of private payors?

We wrestled with many of these questions in the 1990s, but there are new aspects now, greater data and organizational capabilities in both the purchaser and provider sectors and much more urgency to move forward with payment and delivery system reform to accompany legislation aimed at increasing access. 

One fear is that the access component will get done without payment and delivery system reform, causing costs to skyrocket and leading, potentially, to future cost controls. It is important that health care providers add their voices, individually and collectively, to this national debate. The making of major legislation is always messy, but there is real momentum right now. Whatever passes will inevitably be incomplete, and there will be unintended consequences.

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Posted on March 5, 2009 by Mark Lutes

Funding Health Reform: Post-Acute Care Payment Bundling

For health care facilities, and those who invest in them or lend to them, the President’s budget underscored the emerging “shape of things to come” in the delivery system. In short, the Administration intends to compel delivery system modifications through aggressive payment policy changes.

What industry segments are immediately concerned? -- home health agencies, skilled nursing facilities, IRFs, LTCHs, and rehab facilities. In the name of “efficiency and accountability” the President proposes to bleed (Bleeding Edge redux?) $950M over 5 years and $17.8B over ten years from payments that would otherwise have gone to these facilities. We know this because the budget is echoing Director Orszag’s work at the CBO, finding savings from putting into the hands of hospitals financial responsibility, on an MS-DRG by MS-DRG basis, for the care Medicare otherwise would have paid these facilities for within 30 days after inpatient discharge.

In the CBO formulation, bundled payments would have been applied to 1/3 of discharges by 2013 and all discharges by 2015. The budget scores this proposal somewhat higher than CBO did so one might speculate that more rapid application is now on the Director’s mind. Somewhat comforting to investors in the affected facilities is that savings begin in 2013 and that over half of the ten year savings are not realized until 2018 and 2019.

Does this “reform” propel acquisitions of post-acute facilities by acute facilities? Alternatively, will acute facilities have the market power to negotiate favorable terms in purchasing post-acute services from such facilities? Does this require additional hospital and physician integration to produce the admission patterns that will allow hospitals not to lose their shirts in paying for the new care?

Will any state insurance departments want to see hospitals establish reserves against the possibility of the cost of their post-acute care payment responsibilities exceeding their financial wherewithal? The CBO write-up of this program also included take backs so that hospitals would only realize 20% of the savings that Medicare expects that they would produce. Of course there could be a big negative for acute care hospitals if Medicare’s take backs make the margins small and expected savings do not materialize because of case mix, physician ordering patterns, or a dozen other variables. What upheaval do you predict?

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