Behind the Scenes on Health Care Reform

By Melvin F. Hall, PhD

Having attended a private meeting on health reform at the White House and spent considerable time on Capitol Hill recently, I can report that the momentum for achieving health care reform this year remains strong, with legislation seen as likely by the late third quarter of this year. The details are still sketchy, but several themes of major importance to providers are emerging. This is a time to be paying rapt attention to the developments unfolding in Washington and to be prepared to give informed input to your health care associations and members of Congress.

For sure, stumbling blocks to success on legislation remain, particularly over a public insurance option for those who can’t get employer-sponsored coverage and plans for a federal comparative effectiveness research entity. There is also the threat by Republicans to effectively shut down the Senate if the final bill doesn’t reflect a true sense of bipartisanship.

The momentum has been fueled in large part by President Obama, who believes that our long-term economic sustainability rests on controlling health care costs and stopping a situation in which hundreds of billions are spent on care for the uninsured in inappropriate settings. The president is far from alone; everywhere you look in health care, every major player is boarding the reform train, including insurers, employers, and the pharmaceutical lobby.

Now, with a new HHS secretary in place and the new White House Office on Health Reform being led by a familiar face—former CMS Administrator Nancy-Ann DeParle—the playing field is set for what is certain to be tough negotiations over the final package.

Recently I and some CEOs of a number of key health care organizations had an interesting meeting at the White House office of Ezekiel Emanuel, MD, senior counselor for health care policy. Some other key administration staffers were present. It’s clear that the president’s plan has several critical components: reducing health care costs for families and businesses; maintaining consumers’ ability to choose their doctors and hospitals; and making quality and affordable health care available to all Americans. While the president is leaving a lot of the details to be filled in by Congress, I got the strong sense of how committed the administration is to this effort.

Setting aside the debate over coverage options (see this for a good summary of those details), one issue that comes up again and again in my discussions in Washington is hospital readmission rates. Nationally, that rate averages around 18 percent. Now of course this includes readmits for diagnosis that were not present during the original stay and unforeseen complications. But there is a significant share, perhaps as much as 50 to 60 percent that are the result of medical errors, nosocomial infections, misdiagnoses, etc. The Obama administration is very focused on putting incentives in place to dramatically reduce those readmissions, and the Senate Finance Committee’s new report on reform options shows that senators are looking at ways to reduce readmissions while using payment incentives to encourage greater care coordination. Under this option, Medicare in 2010 would begin to identify national and hospital-specific data for readmission rates related to eight conditions (selected because of their high volume and the high rates of readmission). Hospitals later would be informed about how their readmission rate compares nationally and could receive a payment withhold if they do not improve.

At a recent hearing of the Finance Committee, more than a dozen physician, hospital, and insurance executives told the senators that the U.S. health care system should be revamped to reward providers for preventing readmissions, payers for promoting more efficient practices, and doctors for working with patients before they get sick.
 
I contacted Glenn Steele, president of Geisinger Health System, about his testimony. He told the senators that chronic-care management must become the central focus of efforts to change how care is delivered in the U.S. Geisinger is set to release a study on how it has reduced costs and improved care for chronically sick patients. Steele said that a number of the health system’s sites saw reductions of 50 percent or more in the number of re-hospitalizations. He told me he received some pushback from senators on the fact that a majority of doctors are in solo practice or other small practices not affiliated with large, integrated systems. Steele and I discussed how all the signs are pointing to the need for most physicians to rethink their affiliations with hospitals. One major reason is that in reform options I have seen, Medicare would shift to bundled payment, under which hospitals and physicians would have to share fixed reimbursement for inpatient care and care following discharge for up to 30 days.

I also have been pushing the notion—which has been gaining traction in the behind-the-scenes negotiating—that hospitals should be rewarded for their ongoing improvement efforts, not just for a static point in time performance. You can see evidence of that uptake in the recent Senate Finance Committee report on health reform and in bipartisan legislation proposed by Chairman Max Baucus and Sen. Chuck Grassley, the ranking minority member.

There is also the possibility of tort relief for hospitals that do well on publicly reported clinical measures, patient safety and safety culture, and patient satisfaction. No one is saying those hospitals will have a “safe harbor,” but there are other options under consideration. I have heard this from a number of key staffers, including those of Baucus; Senate Majority Leader Harry Reid; Sen. Tom Coburn (R-Okla.); and Rep. Nathan Deal (R-Ga.)

Finally, if you look for the common theme to all of the health system reforms, one word pops up: transparency. So much of what providers are already doing in the area of reporting on clinical measures and measures of patient satisfaction will become an ever-larger means to getting paid for what they do. Like or it not, this is the future, and it is getting closer all the time.

Melvin F. Hall is chairman of the board of Press Ganey Associates, Inc.