Healthcare reform is not just about coverage

A characteristic of Barack Obama’s Presidency was the high level of policy innovation that occurred beneath the headlines. Healthcare was no exception. The purpose of the Affordable Care Act (ACA) is not just to expand coverage, but to improve the delivery of health services through the use of payment incentives and public-private partnerships. Repeal and replace may be the republican mantra, but the ACA has broadened the scope of reform in ways that will persist.

The insurance mandate, state exchange markets, Medicaid expansion, and requirement to cover pre-existing conditions are well known.

{mosads}But another objective of the ACA is to control costs by developing payment models that reward value over volume. In this context, the term value refers generally to patient satisfaction, improved health, and controlling the per capita cost of health care.

The traditional fee-for-service model, where health providers are reimbursed for each separate service such as CAT scans, contains inefficiencies. It encourages over-utilization, fails to align incentives across different providers, and shortchanges preventive care.

According a study, the United States experiences lower life expectancies and worse health outcomes despite spending more per person on healthcare than twelve other high income nations.

The ACA has sought to phase out fee-for-service with alternative payment models that encourage efficiency, preventive care, and better primary care coordination. In other words, that holds providers accountable for quality of care and total spending.

To this end, the ACA created the Center for Medicare and Medicaid Innovation (CMMI) to develop and test new payment models and partner with states to do the same.

This office has been busy. In six years over thirty new alternative payment models were launched and thirty eight states and territories participate in the State Innovation Models initiative to implement regional reforms. Thirty percent of Medicare payments are now tied to alternative payment arrangements.

For example, some models provide “bundled payments” that contain a fixed payment for the multiple services a patient receives during a particular course of treatment. Several hybrid models provide performance based incentives in exchange for a reduced fee-for-service.

There are also models that encourage the development of Accountable Care Organizations (ACOs) that align a patient’s care across multiple providers.

With federal support, both Maryland and Vermont have entered into global payment arrangements for entire patient populations. This means that total revenue for certain health providers, such as hospitals, is set at the beginning of the year.

The idea is to provide a predictable, upfront revenue source to encourage investments in improved care while controlling total cost growth. Maryland’s program started in 2014, and the results so far have been promising.

It’s too early to gauge the long term impact of these payment initiatives, but the growth of healthcare spending has slowed since passage of the ACA. While it is contended that certain payment models contribute to industry consolidation, a new study published by Health Affairs finds little evidence that consolidation supports alternative payment arrangements such as ACOs. Policy wonks might quibble over details but the general concept of providing performance based incentives is compelling.

It is not clear what tweaks or wholesale changes the Trump administration might make to the alternative payment paradigm. But as Governor of Indiana, Vice-President Mike Pence’s Medicaid expansion model was the Healthy Indiana Plan 2.0. This program requires low income participants to make monthly contributions and provides higher reimbursement rates for physicians.

The “conservative based” premise of this plan is to encourage personal responsibility while improving access to care by enticing more physicians to participate. The program was designed by Seema Verma, who is Donald Trump’s nominee to head the Centers for Medicare and Medicaid Services, which is where the CMMI is located.

Probably the most underreported reform effort is the notable strides made to reduce medical errors and facilitate the spread of best practices.

The 1999 landmark report “To Err is Human” called attention to the widespread problem of preventable medical errors, but remedy efforts remained fragmented. Launched in 2011 with ACA funding, the Partnership for Patients is a public-private initiative tasked with reducing hospital errors and readmissions.

The program now consists of 16 Hospital Improvement Innovation Networks working with over 4,000 hospitals to provide education, training, and promote the spread of best practices. A similar network, the Community Based Care Transitions Program, develops methods for improving hospital transfers to reduce readmissions.

The Partnership identified hospital errors responsible for preventable injuries and deaths, such as pressure ulcers and surgical site infections. The program facilitates a collaborative process where high performing hospitals share their methods. Preventable errors have so far declined by an impressive twenty-one percent. This initiative is complimented by other quality improvement measures, such as the shift to electronic medical records spurred with funding from the 2009 stimulus bill.

Healthcare reform is a process, not a silver bullet. It takes time to evaluate which coverage and payment incentives work, which best practices and care standards to adopt, all while incorporating the latest in medical science and technology.

There are necessary roles for both government and the private sector. At its best, the ACA reflects this.

Challenges remain and reform is needed to stabilize the exchange markets and boost competition. Greater antitrust scrutiny is needed to contend with the high level of industry consolidation. Moreover, the growth of health care spending is projected to increase due to an aging population.

But reform is no longer just about coverage. It also includes achieving value and patient safety. Those objectives will not be repealed.

Douglas Singleterry is counsel at Vasios, Kelly & Strollo where he specializes in healthcare litigation and is co-author of New Jersey Uniform Commercial Code. He has served on the North Plainfield Borough Council since 2005.

The views of contributors are their own and are not the views of The Hill.