It’s been a while since I have written on this blog because we have been waiting for the democrats to sort out their differences. The passage of the Senate finance health bill is the first step in convergence on what we can expect to see from health legislation.

What do we need to prepare for?

1.  Lower reimbursement. The way the CBO plans to pay for broader insurance coverage is to pay providers less over the next ten years. If a public plan is enacted that payment will be either negotiated by government entities or the payment will be tied to a percentage of Medicare reimbursement, which is proposed at Medicare plus 5%. This is the way the insurance plan will be funded in addition to higher taxes for those individuals making 250,000 dollars per year or more. Therefore, organizations that are not focused on radically redesigning the way they deliver care to become more efficient will face an uncertain future. I would estimate that a 2-5% productivity improvement (depending on inflation) per year is the minimum to survive financially moving forward. This improvement will be required because of a flat or declining revenue stream for providers. The productivity improvement required may be much higher if a public plan is enacted and many employer sponsored plans are transitioned to a public option. With no commercial rates to rely on organizations are going to have to survive on what are considered inadequate government payments today. It appears   meaningful payment reform won’t happen for years as the only provisions in the bills for reimbursement reform are for pilots with no action recommended and no date established by which change must occur. With so many variables it really is difficult to predict the future but with any of the present scenarios plans should be put in place to begin to manage to significantly lower reimbursement. Of course this is exactly what we have been working on with the Health Care Value Leaders Network. www.healtcarevalueleaders.org Those interested should go to this website and sign up. We will contact you and help you get to work by learning form others who are achieving remarkable productivity improvements.

2.  More federal government bureaucracy. There are many new federal agencies created in all 5 of the bills on the floor (http://www.createhealthcarevalue.com/blog/post/?bid=104). Quality, performance reporting, innovation centers, comparative effectiveness centers, and more will be centralized and run from HHS. This probably  means more regulation and federal control but we don’t know for sure. We will need to prepare for more compliance programs related to federal oversight. If we aren’t freeing up staff by improving productivity from operations we won’t be in compliance and reimbursement will decline further.

3.  Specialists and primary care doctors are going to have to work closer together. In the legislation there is money for a number of pilots related to medical home and accountable care organizations. There are many flaws in these concepts as presently articulated but all the bills have the concepts clearly articulated as being important to pilot in forthcoming reimbursement efforts. I am in complete agreement that primary doctors and specialists need to work more closely together.  I am not in agreement that these theoretical models aggressively promoted by academicians are the appropriate solution. In fact, I am fairly certain these models will fail miserably because they are not focused on the right problem. I outlined in the September-October of Health Affairs (http://www.createhealthcarevalue.com/blog/post/?bid=102) the concept of designing a system around value to the patient vs. value to the doctors and hospitals. Accountable care organizations and medical homes create value to providers not patients.

4.  Universal Insurance with significant federal involvement. Whether it’s a public plan, a co-op or a different model there will be a universal insurance system. It isn’t designed to do anything differently than our existing government insurance systems including Medicare and Medicaid. This means that costs will continue to escalate and as noted above reimbursement will continue to decrease and eventually more draconian controls will need to be added to control costs. What we have proposed at this site has been a system based on provider competition, which rewards better quality and cost of care delivery. In proposed insurance options there are no specific provisions for that to happen.

5.  Many years of piloting all kinds of initiatives through HHS grants. Most providers will be involved in some government pilots. Whether it’s medical home demos, insurance demos, reporting demos there will be a lot of money spent trying to gather data on what works and what doesn’t for a myriad of questions. This also means that one common system administered by HHS is years away. It may mean that we opportunity here in Wisconsin to prove that many of our ideas regarding quality and efficiency can work to improve health. We will need to get in line quickly for the federal dollars available to test our approaches.

To summarize, change is going to happen. We need to prepare for lower reimbursements, greater federal oversight of care delivery, and a new insurance program administered if not by the government then with a lot of government involvement.