The Obama administration is pursuing an aggressive timetable to deliver on a campaign promise to make affordable health care available to all US residents. Though the task is daunting, the original timetable of late autumn is still achievable.
In a letter to Congress dated June 2, 2009, President Obama expressed his broad strokes for the new health care plan, and he asked that it include:
- a public health-insurance option;
- a health-insurance exchange;
- a provision allowing individuals to keep their current coverage;
- a measure promoting best practices to improve health quality; and
- a mechanism that would pay for the full cost of health reform (estimated at $1.2 trillion to $1.5 trillion) through a combination of reducing Medicare and Medicaid spending and finding new sources of revenue.
The president also indicated a willingness to consider individual and employer mandates, as well as an enhanced role for the Medicare Payment Advisory Commission (MedPAC). Currently, there are separate plans in the House of Representatives backed by Republicans and by Democrats, as well plans in the Senate being developed by the Health Committee and the Finance Committee. As one would expect from such a large undertaking, where every aspect of the health sector will be affected, there will be many adjustments and compromises before an agreement is reached.
This is an optimal time for those in the health care industry to examine the legislative proposals closely and assess their impact; only then can they develop strategies to maintain or grow their enterprises as the climate continues to change.
Pay for Performance
The president’s budget proposal for fiscal year 2010 included a recommendation to implement a hospital quality-incentive payment program, with projected savings of $11 billion over 10 years. MedPAC continues to recommend that Medicare change payment-system incentives by basing a portion of provider payment on the quality of care provided, and to recommend that Congress establish a quality-incentive payment policy for hospitals, physicians, Medicare Advantage plans, home health agencies, skilled nursing facilities, and dialysis facilities.
The Senate Finance Committee’s April 29 description of policy options on transforming the health care delivery system included proposals to implement a hospital value-based purchasing (VBP) program; to require the HHS secretary to complete VBP-implementation plans for home health agencies and skilled nursing facilities by 2011 and 2012, respectively; to make improvements to the physician pay-for-reporting program; and to require the HHS secretary to establish quality-reporting programs for inpatient-rehabilitation and long-term–care hospital providers by 2012.
The House has not yet issued policies on VBP this year. In 2007, the House Children’s Health and Medicare Protection (CHAMP) bill included a provision on the development, reporting, and use of health care measures, but did not include any provisions on VBP.
The Advanced Medical Technology Association (AdvaMed), a nonprofit association representing medical-device manufacturers, has expressed support for a well-conceived and executed VBP program, and has provided the Senate Finance Committee with detailed comments on its proposals. AdvaMed has held meetings with key Senate and House committees and members’ staffs to discuss modifications to these proposals to preserve innovation by recognizing that measurement should not freeze medical practice in place; to require that all measures receive endorsement from an organization that has broad stakeholder representation, including representatives from the life sciences, and meets certain standards; and urge that efficiency measures consider both quality and cost, and for purposes of measuring efficiency, quality measures should be outcome measures.
Imaging Cuts
Despite their proven role in improving patient outcomes and providing value to the health care system, medical imaging services are frequent targets of cost-cutting efforts. The president’s budget proposal includes a recommendation to use radiology benefit managers (RBMs) to ensure appropriate use of diagnostic imaging. In addition, in its March 2009 report, MedPAC recommended that CMS increase its assumption about how often medical imaging equipment over $1 million is in use from the current 25 hours to 45 hours per week. This represents an increase in the equipment-use assumption from 50% to 90% and would reduce CMS payments. CMS calls for a 90% equipment-use assumption in its proposed Medicare Physician Fee Schedule.
Along with the Access to Medical Imaging Coalition (AMIC) and the Medical Imaging and Technology Alliance (MITA), AdvaMed developed a proposal to ensure appropriate imaging use. In April, the Senate Finance Committee released a list of policy options on transforming the health care delivery system that identified two areas of concern for imaging services: transparency in self-referrals and adherence to appropriateness criteria.
In response, AdvaMed asked the committee to consider the deeper-than-anticipated cuts to imaging reimbursement under the DRA and not impose additional imaging cuts. It supported the committee’s proposal to require that physicians disclose their financial interest in certain imaging services provided through the in-office ancillary-services exception, and it recommended the inclusion of the proposals developed jointly with AMIC and MITA that deal with inappropriate utilization. AdvaMed also expressed concerns about a proposal to use RBMs for certain imaging services.
AdvaMed held meetings with Senate and House committees and members’ staffs to discuss these proposals and to urge adoption of the AdvaMed–AMIC–MITA proposals.
Comparative Effectiveness
Many policymakers have expressed interest in establishing a national entity or initiative focused on comparative-effectiveness research as a means of reducing the growth in health care costs. Although many factors contribute to rising health care costs, including medical errors; outdated, inefficient health care delivery systems; paperwork burdens; and waste, fraud, and abuse within the system, comparative-effectiveness research is often focused on studies of pharmaceuticals, medical devices and diagnostics, and services/procedures. This is in spite of the fact that appropriate use of medical devices and diagnostics often reduces health care costs by improving outcomes and minimizing complications.
While a number of organizational models are being discussed, many envision an entity that would perform comparative-effectiveness studies of alternative interventions. Such studies could range from reviewing existing medical literature to sponsorship of various types of clinical trials or studies. The conduct of such trials or studies would probably be lengthy and costly, with clinical trials requiring the involvement of large numbers of patients.
In the American Recovery and Reinvestment Act, $1.1 billion was appropriated to the Agency for Healthcare Research and Quality (AHRQ), the National Institutes of Health, and the HHS Office of the Secretary for comparative-effectiveness research The legislation refers to clinical comparative-effectiveness research, but does not explicitly preclude cost-effectiveness studies.
The Institute of Medicine is developing recommendations for HHS research priorities using these funds, and a Federal Coordinating Council has been created to coordinate comparative-effectiveness research generally. AdvaMed provided public comments before the Institute of Medicine, the Federal Coordinating Council, and the AHRQ National Advisory Council on HHS implementation of the $1.1 billion appropriation.
Sen Max Baucus (D–MT) and Sen Kent Conrad (D–ND) introduced a bill in the last Congress to create a public entity to be charged with the conduct and synthesis of comparative-effectiveness research. A somewhat similar bill was introduced in the House in May 2009. Neither the Baucus/Conrad bill nor the bill introduced in the House provides for a comment period on the draft research report.
Just before it recessed for the summer break, however, the House approved, by voice vote, an amendment prohibiting comparative-effectiveness research from being used to deny or ration care.
Gain Sharing
Gain-sharing arrangements allow hospitals to share with physicians a percentage of any reduction in the hospital’s costs for patient care that is attributable, in part, to the physicians’ efforts. Last year, CMS issued a proposed exception that would have allowed certain gain-sharing arrangements to be developed nationwide without violating the physician self-referral or Stark law.
In the final Medicare Physician Fee Schedule rule, CMS decided not to finalize the proposed exception, but elicited additional comments on 55 specific questions related to gain sharing. AdvaMed submitted detailed comments to CMS expressing strong support for initiatives to increase the quality of patient care, but registering serious concerns about gain-sharing arrangements and the risk that they pose to patient care. CMS is proceeding with its three gain-sharing demonstration projects, each of which involves multiple sites.
The Senate Finance Committee recommended, in its first paper on health-reform policy options, that there be a permanent extension of the secretary’s demonstration authority under Section 646 of the Medicare Modernization Act. To date, under this authority, CMS has announced three separate demonstrations, with implementation expected in 2009. AdvaMed provided comments expressing serious concerns about this broad extension of authority and its potentially negative impact on patient care. The American Hospital Association is continuing to pursue statutory and regulatory changes to enable gain-sharing arrangements to be developed nationwide.
Physician Gifts
On another important health care issue, a revised Physician Payment Sunshine Act (requiring disclosure of payments to physicians by manufacturers and other organizations) was introduced in January 2009 by Sen Charles Grassley (R–IA) and Sen Herb Kohl (D–WI), the authors of the original 2007 Sunshine Act. The new act limits preemption only to payment categories collected at the federal level. AdvaMed is working with the sponsors to recommend improvements to the bill.
Voluntary regulations of gift disclosures have been in place in California since 2003 and in Nevada since 2008. In August 2008, Massachusetts became the first state to attach financial penalties to banned gifts from device companies to practitioners and to require reporting of allowable payments. Similar bills have since been introduced in 14 states, and AdvaMed has been active in opposing them. Earlier this year, Vermont became the second state to pass marketing legislation, with device compliance scheduled to begin in July 2010.
Steve Smith is vice president, client services, The Imaging Center Institute, Tustin, California.