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Challenges Created by Health Care Reform

Health care reform presents both opportunities and challenges. Even though health care reform passed through Congress and was signed into law, the situation remains dynamic. Health care providers should consider how future changes and trends could impact their business.

Workforce Shortages

Coverage of an estimated 32 million more Americans is likely to increase demand and worsen an existing shortage of health care practitioners. The situation is especially true in the areas of primary care and general surgery doctors, nurses and physician assistants. Increased patient loads may exacerbate difficulties that already exist in medically underserved areas of the country, such as rural environments.

The new law includes several measures and incentives intended to help the situation, including:

Providing 10% Medicare bonus payments to primary care physicians (family medicine, internal medicine, geriatrics and pediatrics), and general surgeons practicing in underserved areas
Raising Medicaid payments for primary care physicians
Revising Medicare's geographic payment adjustments to benefit physicians in rural and high-cost areas
Increased funding for scholarships and loan repayments for primary care doctors, physician assistants and nurse practitioners working in underserved areas
Supporting the training of thousands of new primary care providers
Establishing new nurse-managed health clinics to train nurse practitioners and operate in underserved communities

Whatever their eventual effectiveness, the impact of these changes will build over many years. It takes time to educate and train new primary care providers, but efforts are underway to make doing so a priority - not only nationally, but in North Carolina too.

Shifting from Quantity to Quality

The new legislation does not address the rising costs of medical care in extensive detail. Providers may wonder: How is America going to pay for all these new initiatives?

By design, part of the answer will come from a shift in the health care value equation away from paying more for quantity towards paying for greater quality and value.

The new law references several approaches to begin transforming the health care delivery system in this way. Some of these initiatives remain in the formative stages, while others expand on programs already underway. Providers should consider how the following initiatives may affect business operations moving forward:

Medical Home Concept:

This approach reinforces the central role primary care plays in patient health, and the relationship between patients and their providers. It gives the medical home responsibility for all of a patient's health care needs, either by handling them directly or by working through other providers. Pilot programs already underway are validating the benefits of the Medical Home approach.

Accountable Care Organization (ACO):

The rationale behind this health care delivery model is similar to the Medical Home concept: improving quality and efficiency through better coordination among multiple providers. An ACO is formed when groups of providers join together and become accountable for care delivered to a defined population. The ACO model may involve group practice arrangements, networks of individual practices and partnerships or joint ventures between physicians and hospitals. With a focus on quality measurements and tracking, the law is designed to reward ACOs with a portion of the cost savings they achieve.

Value-Based Purchasing:

The new legislation establishes a value-based program in Medicare for hospitals. Performance in the quality of care will be publicly reported, covering measures related to heart attacks, surgical care, infections associated with health care, pneumonia, patient perceptions of care and other areas. Financial incentives are tied to quality improvements, and the plan is to extend the value-based approach to encompass skilled nursing facilities, home health agencies and ambulatory surgical centers later. This practice of linking payments to quality outcomes expands on the "Pay for Performance (P4P)" approach that was underway before the new legislation passed.

Bundling:

The cost component of the health care value equation gets direct attention with this approach. Designed to encourage more efficient use of services, it creates new demonstration projects in Medicaid to pay bundled payments to multiple providers to cover all services involved in an episode of care. Since one episode of care could easily span inpatient hospital visits, different physicians, outpatient hospital services and post-acute care, the comprehensive perspective encouraged by bundling payments should reduce overall spending and the duplication of services. Pilot programs are part of the health care reform plan.

Physician Quality Reporting Initiative (PQRI):

Given all the emphasis on quality, the PQRI program adds tangible substance and a meaningful definition to the term. Started in 2007 by CMS as a voluntary reporting program, the initiative specifies the metrics and areas physicians use to measure quality, and gives eligible health care professionals a financial incentive for participation. The program continues to grow. For 2010, there are more than 200 quality measures in the PQRI developed by different medical groups. (The program's outcome registry also gives practices the opportunity to participate in the CMS eRx incentive program.)