Legal challenge tests already-accepted changes in health care

June 17, 2012

Often overlooked in the Supreme Court challenge to the health-care law are changes that hospitals, doctors and insurers had been moving toward even before the law was passed in 2010.

Some of these could be halted if the court throws out the Affordable Care Act, or hobbled if the justices excise parts of it, experts say.

The changes include increasing the role of primary care, especially for low-income patients; forcing hospitals and doctors to work together closely; and reducing pay to hospitals if they don’t meet patients’ expectations or outcome benchmarks set by the government.

“We have to change and we know that,” said Ken Raske, president and chief executive of the Greater New York Hospital Association, which represents 250 hospitals and medical care facilities. “But it’s easier if you’re going to build the building to have the shovels and picks and the hammer and nails than trying to dig it out with your hands. That’s what the [Affordable Care Act] is.”

One of the concerns raised during the debate over the law was that expanding coverage would lead to a shortage of primary care doctors. The law allocates more money to provide primary care to people, especially the poor. The theory is that seeking early care or preventive measures will help more people stay well enough to avoid expensive hospitalizations or develop chronic conditions.

The government has spent $1.9 billion to build and expand community health centers and $512 million to train more health-care workers, including primary care doctors, physician assistants and nurse practitioners, according to the Kaiser Family Foundation.

Also at stake are some new methods to pay doctors and hospitals to reward good and efficient medical care, and ongoing efforts to come up with different reimbursement models. Many of these changes are being implemented by the Centers for Medicare & Medicaid Services. These include 65 collaborations among hospitals and doctors, which are working as “accountable care organizations.” Freed from antitrust laws, they can earn bonuses from Medicare if they provide care more cheaply without sacrificing quality.

While only those organizations that volunteered are in ACOs, another change starting in October would automatically affect most hospitals in the country. Medicare has announced that hospitals will face financial penalties or earn bonuses depending on their rates of readmissions, reviews by patients and thoroughness in following basic guidelines for clinical care. Physicians, too, will see their Medicare pay rise or fall based on the quality of their care and the degree to which their patients don’t overuse Medicare services.

The health law’s authors want to supplant the current, widely used piecemeal payment system in which providers earn more for a great number of tests and treatments without any concern about quality.

The federal Center for Medicare & Medicaid Innovation is experimenting with dozens of other targeted trials, giving money to groups that seek to reduce the prevalence and costs of asthma in New England, strokes in Louisiana, chronic pain in North Carolina and dental problems and diabetes among Native Americans on South Dakota reservations.

If the government’s efforts are curtailed, it is not clear whether the private health-care market will move forward with changes to coordinate care and operate more efficiently.

“I don’t think we’d be where we are today in accountable care but for the Affordable Care Act,” said Douglas Hastings, a health-care lawyer in Washington. He noted that nearly half of all people in the country with coverage get it through the government. “When I sit in on meetings with private payers, they say, ‘We model a lot on what Medicare does.’ Accountable care may still move forward in the private market, but if this law is deemed unconstitutional, it slows down or stops the momentum.”

But J. Peter Rich, a health-care lawyer in Los Angeles, said the movement to transform the way care is provided will continue even without the law, with providers joining together into larger systems, forming new affiliations and being held to new standards for keeping down expenses and delivering results to patients.

“There’s tremendous cost pressure nationwide on health plans as well as hospitals, primary care physicians and other providers,” he said. “With an aging population and the increasing financial burden of chronic diseases like type 2 diabetes, these cost pressures are not going to go away.”

Even if the law is struck down, some supporters say Medicare might be able to resurrect some of these ventures as demonstration projects. But it would need congressional authority to expand them nationwide, said Gail Wilensky, a former Medicare administrator.

“If (the court) literally invalidated everything, they’d need new legislative authority,” she said.

— Kaiser Health News

Kaiser Health News is an editorially independent news service of the of the Kaiser Family Foundation, a nonpartisan health-care policy organization that is not affiliated with Kaiser Permanente.

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