Healthcare reform’s focus on outcome and how that affects doctors

With the signing of national healthcare reform into law, the U.S. healthcare system faces almost immediate — and substantial — transformation. I spent a recent Sunday reading all that I could find in order to get my arms around this massive piece of legislation and to understand its health policy implications.

Here is my view from 50,000 feet.

I needn’t list all of the aspects relating to expanded coverage and insurance reform measures because the news media has already done a great job of reporting on these.

For instance, most of us have heard or read that:

* 32 million citizens will gain access to coverage by 2019, increasing the proportion of the population with coverage to 94 percent.

* Medicaid will be expanded and reimbursement for primary care services will increase.

* Insurance marketplaces, or “exchanges”, will be created. These will be similar in form to the Federal Employee Health Benefit Plan, multi-state insurance plans, or consumer operated and oriented plans that foster nonprofit member-run cooperatives.

* Regulations will prohibit insurers from capping annual and lifetime benefits.

* A phased-in process will prevent insurers from excluding coverage for pre-existing conditions.

The issues that interest me are those that you won’t read about in the Wall Street Journal or hear discussed by the pundits on the Sunday morning news programs — the reforms that impact hospitals, physicians, and health plans.

For these important stakeholders, the writing is on the wall: “No outcome, no income.”

As I see it, there are several substantial policy issues for hospitals.

The first is the obvious drift toward bundled payments. Beginning in 2013, there will be a national, voluntary, 5-year pilot project on bundled payments to providers for 10 conditions. For most hospitals, bundled payments will necessitate major financial reorganization.

Next, financial penalties will be imposed on hospitals for excess readmissions beginning in 2013, and a 1% penalty will be exacted on facilities in the top quartile in hospital-acquired conditions (e.g., Methicillin resistant staphylococcus aureus) beginning in 2015.

Finally, the law establishes a Value-Based Purchasing program based on measures contained in the hospital’s quality review program.

The new law also raises a number of other policy issues for providers.

For instance, in 2012, hospitals and physicians are invited to provide leadership in voluntary Accountable Care Organizations (ACOs) with the opportunity to share in cost savings from improved patient care management. While this is good in concept, how will such organizations be staffed?

The law also calls for the creation of a “Center for Medicare and Medicaid Innovation” to begin testing different payment and service models and it calls for national summits on geographic variations in cost, access, and value in health care. Such initiatives are likely to affect all providers down the road.

For health insurance plans, the new law is akin to the National Committee on Quality Assurance “on steroids”.

The law requires health plans to ensure quality of care and improve patient outcomes by means of quality reporting, effective case management, care coordination, chronic disease management, patient-centered education, medical error reduction, and implementation of wellness and health promotion activities.

At first blush, the requirements may seem overwhelming, but the upside for large health plans (e.g., Humana, Aetna) is that, by pushing the quality agenda, they may earn 5% to 10% bonus payments. By the same token, there may be a downside for smaller plans with fewer resources.

Although there are more policy issues than I can possibly address in this column, I will mention a few:

* A call for a national strategy and an interagency working group to improve healthcare quality

* Creation of a national council and appropriation of funds to increase emphasis on prevention, wellness, and health promotion — including Medicare coverage for well visits and personalized prevention plans

* Chronic disease prevention and public health initiatives aimed at improving wellness of the pre-Medicare population

* Creation of “Transparency and Program Integrity”, a freestanding, nonprofit, patient-centered outcomes research institute.

So, what does all of this mean for those of us in the healthcare industry?

Moving forward, the major themes seem pretty clear: transparency, accountability, and “no outcome, no income”.

What this means for clinicians is that, like it or not, we have no choice but to change the culture of medicine.

We can start by practicing medicine that is based on the evidence. In doing so, we will begin to reduce unexplained clinical variation.

Next, we can relinquish our slavish adherence to the notion of professional autonomy. Instead, we can begin to continuously measure and evaluate what we do, making sure to close the feedback loops.

Most importantly, we can begin to engage with our patients across the full continuum of care.

David B. Nash is Founding Dean of the Jefferson School of Population Health at Thomas Jefferson University and blogs at Nash on Health Policy.

Originally published in MedPage Today. Visit MedPageToday.com for more health policy news.

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