November 19, 2016


Improve the Affordable Care Act, Don't Repeal It (John S. Toussaint, NOVEMBER 16, 2016, Harvard Business Review)

What's Working

Payment system changes. Most everyone in the industry believes the present fee-for-service system rewards the wrong behavior. It is a system that focuses on treating sickness and does not reward providers for keeping people healthy and out of the hospital. Hospitalization drives 80% of the overall cost of care. Reducing it can lead to large overall reductions in cost for caring for populations.

The ACA legislation addressed this by establishing different financing models. These new mechanisms have been aimed at paying for value, not volume of services. Administered by the recently created Center for Medicare and Medicaid Innovation (CMMI), the models have created rewards for care-delivery organizations that deliver better health outcomes for populations of patients.

CMMI has introduced many payment model changes, including accountable care organizations (ACOs), medical homes, bundled payments, the Comprehensive Primary Care Initiative, and the Comprehensive End Stage Renal Disease Initiative. Other payment-model changes are on the way.

ACOs have grown rapidly, with over 800 now registered with CMMI. They are designed to bring hospitals and physicians together in a structure that delivers more-coordinated, less-wasteful care. The program is early in its life cycle, but the results are showing improved quality with a small but meaningful reduction in the overall cost of care. They are extremely important because providers are paid to avoid unnecessary care, reduce errors, and keep Medicare beneficiaries out of the hospital -- ACOs share in savings created over a pre-established target.

CMMI is now introducing full-risk-sharing models with providers in the Next Generation ACO Model. This can include a per member, per month payment for large populations of Medicare beneficiaries. Allowing providers to have the payment up front will remove the fee-for-service world completely and unleash the creativity of provider systems to design radically new care models that are patient centered.

If CMMI is dismantled, as some have recently suggested, it's imperative this pay-for-value work continues. The bipartisan Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) legislation is a good example of how both the Republican and Democratic parties can work together in improving the care delivery system. MACRA set up a Physician-Focused Payment Model Technical Advisory Committee. Perhaps this committee can play an important role in threading the needle to show how both parties can work together to make the incentives work.

Public reporting of quality performance data. This is a powerful way to improve care. As a direct result of the ACA provision to publicly report hospital performance, the Centers for Medicare and Medicaid Services (CMS) released overall rating systems for hospitals in July of this year. As its announcement explained, "The new Overall Hospital Quality Star Rating summarizes data from existing quality measures, publicly reported on Hospital Compare, into a single star rating for each hospital, making it easier for consumers to compare hospitals and interpret complex quality information."

MACRA also established similar public reporting activities for physicians. By releasing the Medicare data to certain qualified entities in states, the public has access to comparative reports on individual physicians. In addition, this act gives physicians incentives to move away from fee-for-service to alternative payment models like those described above. This aligns physicians and hospitals to deliver higher-quality, lower-cost care for the populations of patients they serve.

Focus on improvement. Collaborative learning networks have been established throughout the country and are producing encouraging results. CMS has facilitated these networks by committing resources to establish them. An example is the Hospital Engagement Network (HENs). Seventeen HENs were created in 2011, which include more than 3,000 hospitals. Together, they worked to reduce the rates of 10 types of harms, such as patient falls and pressure ulcers. This was part of CMS's Partnership for Patients Initiative, which was designed to improve the quality performance of hospitals. It was a partnership between the government and the private sector, including many consumer groups.

The U.S. Department of Health and Human Services has touted the program's overall success. For example, it stated that 50,000 fewer patients died, 1.3 million adverse events were avoided, and $12 billion was saved at hospitals because of reductions in hospital-acquired conditions from 2010 to 2013. There has been some controversy as to the accuracy of these results, as there was some variation in measurement from hospital to hospital, but overall this improvement initiative delivered real results. The CMS renewed the effort in 2015 for one year.

Similar collaboratives were established for physicians -- for example, the Transforming Clinical Practice Initiative, which was designed to support clinician practices through nationwide collaborative, and peer-based learning networks that facilitate practice transformation.

Eliminating pre-existing conditions as a barrier to coverage. There are two elements of the ACA that appear to have clear bipartisan support. One is allowing people to purchase insurance even if they have a pre-existing condition. This has reduced the insurance rates for this group of people considerably. The other is allowing children up to the age of 26 to stay on their parents' insurance plan. Of course, the irony is that without a risk pool that includes everyone (discussed below), the uninsurable become so expensive that insurance premiums skyrocket -- something that just happened for people who purchase plans on the exchanges.

What Needs to Change

The exchanges. The most attacked provision of the ACA is the insurance exchanges. The cost of insurance is driven by the actuarial risk of the insured. The fundamental flaw of the ACA insurance exchanges was that people could easily opt in and out.

Posted by at November 19, 2016 6:03 PM


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