A Policy Prescription for 2012

Two years after the enactment of the Affordable Care Act, opponents and proponents are destined to collide in the Supreme Court. The controversy surrounding health reform, if not decisively determined by the Court, will certainly impact the upcoming elections.

The individual mandate 

Many would consider the Affordable Care Act the most significant piece of health care legislation since the enactment of Medicare in 1965. Others, however, assume the law is unconstitutional due to its individual mandate for health insurance coverage. The debate over the Affordable Care Act likely will continue long after the Supreme Court weighs in on the law’s most controversial provision this March.

Proponents of an individual mandate (such as myself) point to that indicates that their mandate, which was signed into law by then governor and current Republican presidential candidate Mitt Romney, contributed to the successful enrollment of healthy individuals into insurance risk pools.

Other countries (e.g. , , and ) towards which the United States health system is evolving employ similar mandates.

Although the legal opinions to date have been divided, many scholars believe that as unpalatable as the individual mandate is to  Americans (only 33 percent favor the concept of the individual mandate), it will likely be . As our own Kameron Matthews said nearly 3 years ago, “Mandating universal coverage addresses the administrative costs diverted to marketing and underwriting; mandates promote coverage through the symbolic priority granted by the government’s commitment to universal coverage.”

Hopefully the individual mandate – the lynchpin of securing universal access to care in most multi-payer systems – will survive the Supreme Court’s spring ruling. But if it does not, a legislative fix will become necessary. is two-fold: (1) eliminate the and (2) provide an appropriate-sized refundable tax credit for individuals and families to cover the cost of health care.

Delivery System Reforms

Two delivery system reforms are set to define the new year – accountable care organizations and bundled payments.

Accountable care organizations (ACOs) intend to restructure the delivery of health care from one in which physicians, hospitals, and sub-acute care facilities operate in different silos. Although several organizations currently organized the way policy makers envision ACOs passed on the first iteration of proposed rules for the Medicare Shared Savings Program, more favorable to providers appears to have encouraged several to participate in the demonstration.

The question is whether or not ACOs will work as anticipated. A recent post from the Health Care Renewal blog should remind policy makers that the last time large-scale mergers of health care providers took place, the results often failed.

Integrated health care systems seems to be what ACO are designed to emulate; however, with increasing market power such ACOs may prove able to drive costs upward instead of downward. What do policy makers really want when they think of ACOs?  First, information consolidation is paramount. That liberates individual providers from repeating tests and therefore duplicating costs. Secondly, because Medicare has failed to transition from a retrospective fee-for-service payment system, policy makers are hoping that ACOs will instead of one focused on individual profit-maximization.

The concept of integrated health systems is far from new; the idea of paying one ACO and having the physicians and hospitals fairly divide up the proceeds is.

This shift in payment has also led to the concept of bundled payments. In a demonstration project slated to impact Medicaid providers in 2012, policy makers seeking to implement lump-sum payments for “episodes of care” ranging from heart attacks to hip replacement ought to tread cautiously. One of the most prominent experiments in payment bundling, , has failed to even form contracts let alone make actual payments in over 3 years of experience.

The PROMETHEUS experience indicated that providers had an extremely difficult time accepting the concept of “potentially avoidable complications.”  Providers have been unwilling to accept a “withholding” strategy from payers. Payers have been unable to agree on how to allocate “shared savings.” Adding to the confusion, since bundled payments only account for about 30 percent of patient encounters, the payment system only adds confusion to  already .

If ACOs and bundled payments are to be successful, a few simple ideas should be considered. First, support for ACOs should focus on the delivery of care, integration not only of clinicians but more critically of information, such that patients are completely cared for within the structure of the ACO.

Secondly, payments should be bundled only for specific conditions which are clearly definable at the time of presentation and for which the standard of care can be replicated, without clinical variation, across the country. Initially, it might be best to limit bundling to elective procedures such as joint replacements, routine conditions like pregnancy and childbirth, or obvious critical conditions such as STEMI. Development of bundles for other, more nebulous conditions such as hypertension, diabetes, heart failure management, and asthma should be postponed.

Alternatives and Opposition

As the next election looms, Republican viewpoints on health care must clarify the replace aspect of their “repeal and replace” motto. Realistic options that will still obtain what this nation needs – access to affordable, continuous, quality health care for ALL Americans – will be entertained. Other plans that fall short will be chastised.