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What Are They Doing (to Me) in D.C.?


Idon’t know about you, but sometimes I feel as if we are living in an era of information overload when it comes to all of the ideas that are spilling out of Washington and elsewhere under the sobriquet of “healthcare reform.” I thought we should take a few minutes and try to bring all these proposals into focus.

There is an ideal, almost a nirvana, that is being sought. This would include access with a very big “A” to include most, if not all, Americans, and would recognize key differences in patients (comorbidities), and would incentivize value (e.g., quality and cost), and promote evidence-based medicine (EBM) instead of the usual and customary.

That is a far cry from the system that we currently function in. The reality of today is much simpler, at least for the payment part of the system. A hospital or a doctor does something specific, such as a procedure or a visit, and whoever provides the care submits the bill. It is finite and usually involves a small group of individuals or facilities. Because it is simple and to the point, it allows small hospitals and the generally fragmented physician practices to be in the game.

All signs point to a major healthcare reform bill coming out of Congress this year. How can they know what will work when the demonstration projects are just starting?

Unfortunately, this system of payment and reward has not led us to the outcomes or performance that our country’s leaders or businesses, and more and more our patients, think we should be getting for our $2.2 trillion. Part of this is due to the fragmentation and variability in how healthcare currently is delivered. More unfortunate is the reality of the disconnect between patients and providers, and the complexity of care. In most healthcare communities, patients can wander through the course of their care to many providers and facilities, most of which have no common information system or business relationship.

One solution that is being considered in Washington is bundling. When policy wonks talk about bundling of payment for an episode of care, they are envisioning a world in which whoever is paying for care (Medicare, insurers, etc.) can pay one fee that would encompass the care provided by all providers, all facilities, and over a broad timeframe (e.g., hospitalization, then 30 days post-discharge). That might work for Mayo in southern Minnesota, Geisinger in northeast Pennsylvania, or Kaiser in Northern California, but just how would it work in the vast majority of places in the U.S.?

If a patient’s care involves two or three separate facilities or a number of providers in the hospital, and it spans as many as 30 days after discharge, how would you assign responsibility for flaws in the patient’s care or the need for additional services? And where is the patient responsibility in all of this?

Knowing all of this, is Congress really ready to write new regulations and pivot 180 degrees on the current system? Glenn Steele, CEO of Geisinger Health System and a recognized leader in a forward-thinking organization, has said, “We probably ought to have a system where we can be innovative, rather than just a new set of rules.”

Baby Steps

In some ways, healthcare reform already is moving forward. The Centers for Medicare and Medicaid Services (CMS) has enacted “never events” in an attempt to improve performance by withholding payment for incidents Medicare thinks just shouldn’t happen (e.g., wrong-side surgery, some hospital-acquired infections).

In addition, 14 communities are ready to perform three-year “comparative effectiveness” trials to attempt to coordinate care among disparate sectors of the healthcare continuum. The research model is looking for ways to deliver optimum care in less-organized sectors of healthcare.

In January, CMS announced site selections for the Acute Care Episode (ACE) demonstration project. ACE is a new, hospital-based demonstration that will test the use of a bundled payment for both hospital and physician services for a select set of inpatient episodes of care. The goal is to improve the quality of care delivered through Medicare fee-for-service. Baptist Health System in San Antonio; Oklahoma Heart Hospital LLC in Oklahoma City; Exempla Saint Joseph Hospital in Denver; Hillcrest Medical Center in Tulsa, Okla.; and Lovelace Health System in Albuquerque, N.M., will participate in the demonstration.

But even when we are just at the beginning of field-testing ideas to improve the delivery of care, all signs point to a major healthcare reform bill coming out of Congress this year. How can they know what will work when the demonstration projects are just starting? How can they anticipate the unintended consequences of wholesale reform? Well, that’s just what Congress can—and does—do. We will all be left to figure out the details on the fly.

The temperature seems to be getting turned up a notch with every healthcare blog and Web posting. When the public and legislators read what Atul Gawande, MD, MPH, wrote in The New Yorker and then it is quoted by the president, suddenly it seems that everyone knows that care is much more expensive in McAllen, Texas, than in nearby El Paso, albeit with worse outcomes. The solution is almost anything that purports to reduce unnecessary variability and ties payment to performance.

Prospective vs. Retrospective Payment

To allow yourself to have a broad context of payment reform, think of “prospective” and “retrospective” payment as two options for a new payment paradigm. Don’t roll your eyes; this stuff is material to how we earn our living.

A prospective system might drastically alter what we have now, by throwing out fee-for-service and no longer paying by the unit of the visit or the procedure, and instead using a global fee (e.g., bundling) that is geared more toward efficiency and effectiveness (i.e., use of resources and better outcomes).

On the other hand, a retrospective system might continue to pay a modified fee-for-service fee (i.e., lower than current reimbursement) with a “significant” bonus for performance (e.g., lower readmission rate, fewer visits to the ED) and improved measureable quality. Of course, this can be “new money” for quality or part of a holdback after upfront fees have been lowered.

In any event, we are probably entering an era in which hospitals and physicians will need to think of themselves as part of a “supply chain” and not just think “I did my job, so pay me.” And during this whole reshuffling of the healthcare deck, there might be calls to remove some of the inequities that have been cobbled onto the Medicare and insurance systems. For example, currently there are significant geographic disparities in Medicare reimbursement (e.g., surgery in Mississippi often is reimbursed at 50% of the same procedure in New York City or Los Angeles). And there are significant payment disparities between medical and surgical specialties and primary-care providers that the Resource-Based Relative Value Scale (RBRVS) system has certainly not corrected.

Integration Hurdles

The small percentage of hospitals, physicians, and patients who currently are in an integrated system probably will have a smoother ride into healthcare’s new future. It is easier for Kaiser or Geisinger or HealthPartners in Minnesota to take on all of the business challenges and risks of accountability for performance and rewards for efficiency. But what about most of the rest of us?

Well, it looks as if we will need to be linked together by contracts and business relationships, by information transfer and management, and we will need strong, forward-thinking, innovative leadership. And we’ll need some trust in each other and our institutions going forward. Equally important, our patients will need to step up and into this new world. If providers and facilities are required to perform better, then patients have to stay in their contracted systems. To have accountability, patients must participate actively.

Some of you might be old enough to remember the last time integration of physicians and hospitals was all the rage. In the 1990s, the driving force was to achieve “economies of scale” and to meet the challenges of managed care with an integrated entity. Most of these attempts were expensive failures.

In 2010, the drive to integration might be the radical reworking of a payment system that is based on a global fee, a system that produces the highest quality at the lowest cost.

One caveat is that significant integration might not be possible. Do hospitals have the expertise and capacity to employ physicians to efficiently deliver care? In this recession, is the capital available to purchase and implement the information systems crucial to integrated care?

Prepared for Change

I profess to have no expertise as a prognosticator, but I do expect some significant changes to come out of Washington in 2009. The common wisdom is that we are currently spending enough in the aggregate to provide all Americans with access to healthcare, and to get better performance and less variability. That seems to mean shaping a new system.

SHM supports changes in payment methodologies that improve the quality and value of healthcare services, align incentives, and promote better clinical outcomes. We believe that healthcare pricing and quality should be transparent to patients and purchasers. We have supported the PQRI, hospital value-based purchasing, and loosening of restrictions on gainsharing between facilities and providers.

Hospitalists are positioned well. We practice in groups and often are aligned with many others in our medical staffs, and with our hospitals’ roles in our communities. We already are thinking about the value equation and trying to balance resources and performance. We are young, adaptable, and less entrenched. And we are new and have less to lose.

I am confident we can be helpful in shaping the future and can thrive in most any new environment. But hold on tight: The future is getting here way ahead of schedule. TH

Dr. Wellikson is CEO of SHM.

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