PPACA Impact and Opportunities : Health Care Lawyer & Attorney : Epstein Becker Green Law Firm : Insurance & Costs : Health Reform Musings Blog

Perhaps in recognition of its benefits to areas affected by shortfalls in specialists and primary care physicians or the need for remote monitoring, telemedicine received significant funding in the ARRA. For instance, the Rural Utilities Service was allocated $2.5 billion to fund “shovel-ready” distance learning, telemedicine, and broadband program; the Indian Health Services received $85 million to fund telemedicine; and a portion of the $2 billion allocated to the Office of the National Coordinator is to be used to support the “infrastructure and tools for the promotion of telemedicine.” However, in contrast to the ARRA, the current reform proposals publicly available are missing language facilitating telemedicine which otherwise could be a key component to one of the goals of health reform, bending the cost curve. 

The only attention telemedicine receives in the House Tri-Committee Bill – the America’s Affordable Health Choices Act of 2009 – is in the creation of the Telehealth Advisory Committee. This Committee will advise and make recommendations to the HHS Secretary regarding policies for payment of telemedicine services. However, the Senate HELP’s Bill – the Affordable Choices Act – does not even mention telemedicine. 

Should something be done regarding this missing health reform element? A group of experts have eloquently made the argument that the present infatuation with electronic health records (“EHRs”) should be expanded to focus on improving the quality of care and equities of care, while decreasing the cost and fragmentation of such care by encouraging the development of telemedicine (which includes, as a component, EHRs). 

Also, Intel CEO Paul Otellini provides a sensible guide for achieving comprehensive health reform – and two of his recommendations are reliant on telemedicine. First, he suggests paying providers for outcomes, not just face-to-face visits. If payment was outcome based – even if the correct outcome was achieved in part by utilizing email, the financial interests of the provider would be more closely aligned with the desired goal of the patient, i.e., better health. The other recommendation that involves telemedicine is the development of a nationally-licensed cadre of “virtual care clinicians” to provide care to patients in their home. In the case of an elderly individual with a chronic disease, this could be the difference between staying in their home and moving into a skilled nursing facility and, obviously, the cost between the two options is significant. 

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As the “Three Tenors” (Chairmen Waxman, Miller and Rangel) struggle to finance the access enhancements that are central to the President’s health reform aspirations, the need for meaningful payment reform continues to challenge. This week House Speaker Nancy Pelosi urged the Chairmen to sharpen their pencils in this regard. Moreover, in a letter to the Speaker and Majority Leader Steny Hoyer, the fiscally-conservative “Blue Dog” coalition of House Democrats has now said that the current drafts fail to include sufficient structural reforms likely to succeed in lowering costs and incenting “value” (in purchasing).

These House members would like to see strenuous efforts to capture the savings promised by the literature pointing out the significant disparities in regional health care practice/resource consumption patterns. To that end, the “Blue Dogs” and many analysts are placing a great deal of hope in the ability of payment incentives to trigger the ordering of only appropriate (cost effective) diagnostic tests and pharmaceuticals and the implementation of “evidence based” care paths. 

Intuitively there is great merit to the theme. However, testing of the concepts has been limited to date. Therefore, there is yet little science from which to judge the necessary “octane” of the incentives. Moreover, the amount of change to be engendered by Medicare payment reform is unknown—hence some of the enthusiasm for a public plan that might adopt payment methodologies that echo those of a reformed Medicare fee-for-service system thus putting more strength behind the effort the “bend the curve” of growth in health care expenditures. Finally, policy makers do not how much reinforcing discernment should or could be created among beneficiaries particularly during the statistically costly “last year of life.”

While some provider systems appropriately believe they are “ready, willing and able” to operate under new payment methodologies, most are not. Moreover, even provider systems that have a high degree of clinical integration, IT infrastructure and physician leadership, face significant challenges in operating during a transition stage where some payor customers will strongly reward utilization efficiencies and others will retain payment methodologies that continue to implicitly reward providing services without regard to clinical appropriateness. (These providers are likely to capture the empathy of lawyers like me who also are increasingly operated under mixed payment methodologies.)

Health care investors face concomitant uncertainties. How will the companies they are backing fare in an era where providers are incentivized to order fewer tests, labs and scans? Will the target’s product line continue to do well among providers who are scrutinizing costs to earn incentive payments? Similarly, are the company’s products on the short list for comparative effectiveness review and, if so, what are the likely results and how will such review affect provider system choices?  Therefore, as we watch the Congress adopt payment policy reform, we open up interesting new forecasting questions with regard to the nature of such reform, its pace and its impacts on market actors.

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For the last week or so, the health reform public policy debate has been keyed to the Senate HELP Committee’s draft and thus dominated by whether or not the “Exchange” to be employed in access reform should include a “public plan” and, if so, whether such a plan should have the power to access provider payment rates tied to Medicare and whether Medicare participating providers would be required to contract with it. With this week’s release of the Senate Finance Committee’s draft, it will be interesting to see whether payment reform can similarly capture the attention of the press. Frankly, we have low expectations in this regard insofar as the consequences that the prevalence of fee for service payment methodologies have on health care output are hard to grasp relative to the easier concept of “universal coverage”. Perhaps it is ultimately less important that payment reform capture the air waves than the degree to which payment reform is incorporated in whatever pieces of health reform make it through this session of Congress.

There are, of course, a few helpful signs. The New York Times gave front page treatment to the President’s public embrace of the payment reform issue and his distribution of the Gawande article on health care incentives in the New Yorker. The New America foundation released a report on delivery system change which White House Health leader Nancy Anne DeParle also applauded. These may, however, faint notes against a cacophony of sound around the easier to enunciate (though themselves ill understood) concepts around public plan and access.

Gawande, Len Nichols, Peter Orszag and others are of course right that changing the predominant fee for service incentives that power the health care delivery system is vital to improving both the cost and quality of American health care. Using “medical home”, “accountable care organization”, and episode payments will begin to inject new incentives into the planning and care paths chosen by providers. We expect that Senator Baucus’ Committee draft will begin to increase the content of these payment methodologies into the fuel that powers our enormous health care engine. They are the crucial elements to the much lauded quest to “bend the health care cost curve”. Therefore, even if they do not capture the attention of CNN and MSNBC, the strength of these reform elements in the Senate Finance Committee’s bill, and their survival, bears watching by all who invest in as well as receive health care.

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