Uncertainty Reigns for Entire Industry Post-Health Reform

October 25, 2010

Panelists from the "Perspectives on Healthcare Reform" general session at MGMA 2010 discuss their concerns about the Affordable Care Act, accountable care organizations, and the Medicare sustained growth rate (SGR) formula.

Now cemented as federal law, the Affordable Care Act is leaving the various entities in the healthcare industry on shaky ground these days.

This was the sentiment of “Perspectives on Healthcare Reform” panel at this year's MGMA Conference in New Orleans featuring Charles "Chip" Kahn, president of the Federation of American Hospitals; Michael McCallister, president and CEO of insurer Humana; James Rohack, the past president of the American Medical Association; and Andrew Webber, president and CEO of the National Business Coalition on Health.

Webber, whose group represents employers, said while he supports federal reform, there are still issues "that give us heartburn," and that the goals of "better health, better care, and lower costs," are still hopefully to be attained by a second round of reform.

But don't expect a repeal of the Affordable Care Act with a potential change in Congress following the mid-term elections November 2, the panelists warned.

"Health reform won't be repealed, period," said Kahn, whose group represents nearly 20 percent of U.S. hospitals. "The president will not sign any repeal … but in 2012, there is a presidential election and there could be a re-adjudication of healthcare reform."

Leading up to that election, Kahn added, "will be a lot of noise" with physicians practices, hospitals, and others possibly postponing action until the outcome becomes clearer.

One issue of immediate concern for the physician community - and left out of federal reform - is addressing the Medicare sustained growth rate (SGR) formula, which will create a proposed 21 percent cut in physician reimbursement on December 1 unless the government acts.

Rohack said the "archaic" formula pushes physicians further away from actions like promoting wellness and spending more time with patients, essentially "punishing physicians for doing the right thing."

But whether a lame duck session of Congress will do something about the SGR formula or a new set of legislators will take action is anything but clear. The same fate, the panelists concurred, awaits the Affordable Care Act, which outlines a lot of new programs and initiatives, but puts a lot of action down the road as late as 2014.

One such initiative, creating a lot of buzz and interest in the healthcare realm but with equally as many questions, is the growth of accountable care organizations (ACOs), collaborative approaches to addressing cost and quality of care based largely on physician practice models. In addition to physicians, the team approach incorporates hospitals, home health agencies, and others to take full responsibility for a patient's care.

In addition to bundling payments to doctors, the possibility of federal incentives for coordinated care are having several consequences, according to the panelists, including hospitals gobbling up private practices to create new ACOs.

McCallister, of Humana, said these acquisitions may "be a forward shift" allowing ACOs - in place informally as far back as the 1970s - to move forward. Rohack, however, said he is not as optimistic.

"[In the 1970s] hospitals viewed physicians as their employees and [if that continues] … it will fail now as it did in the past," he said. "If we continue to focus on ACOs as doctors and hospitals only, and don't focus on the patient getting engaged in their own health, this whole thing will fail."

McCallister agreed, but noted that to date, healthcare has not found the proper "triggers" to change patient behavior and the industry is not as comprehensive in knowing its patients, like other industries such as banking and retail, who mail customers information based on prior interactions. Until healthcare can make the same connections, they will not have a full picture of who they serve.

Kahn also noted that he did not believe healthcare reform was the driver of greater physician-hospital partnerships, but instead, "physicians are now faced with either not taking insurance anymore or they don't want to do this [practice medicine] anymore and they will go work for the hospital."

Keith L. Martin is associate editor at Physicians Practice. He can be reached at keith.martin@ubm.com

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