The less flashy side of healthcare

MOUNT VERNON — Strategic Health Care consultant Paul Lee knew what he was not going to be talking about Monday night.

Speaking at the annual meeting of The Foundation for Knox Community Hospital about healthcare reform, the Washington, D.C.-based lobbyist quickly identified the hot-button issues of abortion, immigration and the public option for payments, and said that since they receive the lion’s share of attention given to healthcare reform, he was going to talk about the less flashy but much more substantial issues shaping the debate.

“One of the biggest problems with healthcare reform is that everyone in America is an expert,” Lee said, pointing out that hardly anything can be said on the issue without a league of self-proclaimed experts denouncing it. He said that last year, the 435 legislators in the House of Representatives received approximately 100 million e-mails, many regarding healthcare. He pointed out that President Barack Obama has staked his career on substantial reform to a healthcare system that makes up one-sixth of the U.S. economy. If progress is to be made, he said, some deals will have to be hammered out.

The initial deal to get reform talks up and running, Lee said, was for hospitals to agree to cut $155 million in costs over the next 10 years, pharmacies to cut $80 million, insurance companies to cut $175 million (to which has been added $67 million in taxes in the senate version of the healthcare bill), and $500 million in new taxes on the wealthiest people. Physicians would see a slight increase in pay. These adjustments would be used to extend healthcare coverage to the uninsured or underinsured. It is hoped, he said, the additional business will offset the cost cuts.

Although some have objected to the concept of universal coverage, Lee sees it in practical terms.

“People not covered is unconscionable because when you think about it, we pay for them anyway, don’t we?” Lee asked, citing the increase in self-pay patients in recent years who are often unable to pay at all.

Lee said a number of items in the proposed bills could substantially reinvent healthcare. One provision is for the creation of the Independent Medical Advisory Commission, a board which would be set up with the power of setting medical service rates. Lee said this is being done because Congress does not trust itself to have control over rates. He said hospitals and hospices are currently exempted from IMAC oversight, but he doesn’t expect they will remain untouched.

Geographic variations in payment rates are slated to be ironed out by one provision, he said, as it has become common for people to commute for work and healthcare services to areas outside their residence locale. Although in general Medicare is projected to go down because of the increased coverage, Lee said it is by no means clear that the new coverage will pay as much as did the previous Medicare. At least, he said, the plan allows for Medicare primary care rates to go up in rural areas.

Rural shortages of physicians have been recognized, although Lee doesn’t think the current bills go far enough in addressing this problem. He said the plans do not propose raising the number of intern slots around the country, which are subsidized by the government. Instead, the bills merely talk about redistributing some of the current residency slots, which are underutilized in some areas. The problem, Lee said, is that the need in the underserved areas is more than the re-allocated positions will cover.

One of the major goals of the plans before Congress, Lee said, is to link payments to quality outcomes, assuring that care is getting from the planning phase all the way to the patients. Re-admission for issues that should have been caught during a patient’s first visit will result in payment cuts to healthcare providers. Payments will also be reduced if patients come down with hospital-acquired conditions.

“This will drive changes in the way hospitals do business,” Lee said, pointing out that a few percent can mean the difference between success and disaster for a hospital. Physicians may receive payment cuts, too, if they fail to regularly submit performance reports.

Lee said performance accountability will become a focal aspect of health care under these plans, making sure that physicians’ directives are getting through to the patients. This will become the new definition of “managed care,” he said.

The huge expansion of Medicaid to cover uninsured patients will be paid for by the federal government initially, although Lee noted it is alarming that no provisions are being put in place to prevent Congress from dumping those costs on the states a few years down the road.

Lee said one interesting area is the development of new patient care models that are encouraged by the bills. One such is Accountable Care Organizations, which are organizations combining physicians, hospital and insurance into one, giving the patient a single cost at the end of service. The healthcare plan is proposing to allow organizations of this nature to keep 50 percent of the savings they find by restructuring like this. Various pilot programs are also being set up for payment bundling and other service innovations.

Lee said disincentives are being created to bring down the amount of costly high-tech imaging being done by private physicians, many of whom have been using imaging as an income boost. There will also be payment reductions to attack the vast amount of fraud taking place in the home healthcare industry. Lee said the hope is to eliminate scammers, and that genuine companies will survive.

Lee said he doubts the “public option” of full government pay will survive the debate. A more popular option emerging in its place are cooperatives, which are group health plans cooperatively formed by industries, local government and philanthropic help, not unlike the rural cooperatives which helped cover the costs of expanding electricity service in the mid-20th century.

On the other hand, Lee said, he thinks the no-insurance penalty for people who refuse to purchase insurance will stay, although it has to be adjusted as the current Senate rate for the penalty is less than what insurance coverage would cost.