Effort to Eliminate Waste Coming Soon

It’s not that the Patient Protection and Affordable Care Act doesn’t contain any provisions aimed at reducing the cost of medical care – it’s that it doesn’t have enough of them. Still, what it has should be acknowledged. For example, Politico Pulse has reported that a unit of Health and Human Services will soon announce a package to incent providers to “disseminate effective practices and foster the spread of new knowledge on patient safety to the hospital community.” According to Spencer Health Strategists, who obtained a copy of a draft memorandum a few weeks back, the goal is to dramatically cut the estimated $50 billion spent each year on preventable hospital readmissions and hospital-acquired conditions.

The grants are designed to get private hospitals to improve patient safety and improve outcomes. Instead of developing new approaches or dictating specific practices, financial incentives will be to encourage hospital-generated innovations and to share best practices.  For example, the Innovation Center within the Centers for Medicare and Medicaid Services within HHS will support “states and large systems to developed networked learning project.” Those networks that achieve specified results will get additional resources to expand their efforts.

This focus on the private sector links the effort to improve safety and reduce readmissions underway within Medicare. According to the memo posted by Spencer Health Strategies, by 2013 six percent of hospital payments from Medicare to providers will be tied to public reporting of errors and the provision of safer, more reliable care ….” Over the next 10 years, $70 billion of Medicare hospital payments will be tied to hospitals’ “delivery of high quality care.” Medicaid will introduce similar provisions.

None of this is “official” yet, but based on the Politico Pulse report, it appears the Obama Administration will be launching this initiative soon. The potential of the program is to save billions of dollars and to do so relatively quickly. Even more significantly, the program could save thousands of lives. There’s a lot wrong with the PPACA, but this is an example of something that it gets right.

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Health Care Reform 2009: Required Reading

Health care reform will be painful enough without requiring home work, but such is life. Here then is the required reading list for understanding the 2009 health care reform debate, where it’s going, and why.
(Note: a second list of health care reform required reading was added June 2, 2009 and a third list was added on August 11, 2009)

1. Critical: What We Can Do About the Health-Care Crisis by Tom Daschle withScott S. Greenberger and Jeanne M. Lambrew.

Former-Senator Daschle will be leading President Barack Obama’s health care reform effort, both in his position as Secretary of Health and Human Services and as Director of the Office of Health Reform inside the White House. Ms. Lambrew will be serving as Deputy Director of the Office of Health Reform. That there even is an Office of Health Reform highlights the importance of this issue to the incoming administration. That the Director of this office is also a Cabinet Secretary enhances the prestige — and clout — of both the office and its leader.

This makes understanding soon-to-be Secretary Daschle’s outlook on health care reform, well, critical. His book, Critical serves as a blueprint to his thinking.  Although the book was written before the identity of the Democratic nominee would be, Senator Daschle was an early supporter of Senator Barack Obama. It’s not surprising that his proposal ties-in well with the then presidential candidate’s health care reform proposal. Senator Daschle’s book, however, goes further.

Core to his solution for what ails America’s health care system is the creation of a Federal Health Board. Modeled after the Federal Reserve Board, it’s aimed at removing effort to control health care costs one step away from the day-to-day politics of Capitol Hill. “I believe a Federal Health Board should be charged with establish the [health] system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people. This would make it capable of making the complex decisions inherent in promoting health system performance. It also would give it the flexibility to make tough changes that have eluded Congress in the past.”

Specifically, Senator Daschle would have the Board set the rules for the national health exchange he would create. Through its own research and helping to prioritize research by other federal agencies, the Board would help promote “high value” medical care by “ranking services and therapies by their health cand cost impacts.” Senator Daschle would also have the board “align incentives with high-quality care.”  This would be done through evaluating new technologies as well as by aligning provider payments made by the federal government with health outcomes, rather than with services delivered. Finally, Senator Daschle would ask the Board to assist in “rationalizing our health-care infrastructure” by issuing an annual report identifying where investments are needed across the country — and where they’re not.

In addition to providing a blue print for the Obama Administration’s future health care reform proposals, Senator Daschle does an exceptional job of describing the history of America’s health care reform efforts from 1914 through the present day. As a participant in much of that history, his review can’t help but reflect his own biases, but Senator Daschle ably places today’s debate in an appropriate context.

What’s most encouraging about Critical is that it signifies a clear understanding of the central role controlling medical costs holds in reforming the system. This doesn’t mean Senator Daschle won’t seek to change the health insurance industry. He calls for expansion of federal programs, including a government program that would insure most individuals and small groups. For insurance agents, what is most disconcerting is that Critical never once mentions the role agents play in the current system nor what role Senator Daschle foresees agents playing in his vision for a future system.

 Nonetheless, Critical is important reading as Washington prepares to address America’s health care challenges.

2. Key Issues in Analyzing Major Health Insurance Proposals, by the Congressional Budget Office, published December 2008.

The Congressional Budget Office provides critical input to lawmakers on the expected impact of their legislative proposals. A negative analysis ruling can — and probably should — kill a bill; a positive one can help build momentum and support. Key Issues is not aimed at instructing members of Congress what to do about health care reform. Instead, it lays out how the CBO intends to evaluate whatever proposals Congress generates. As the report notes, “This document does not provide a comprehensive analysis of any specific proposal; rather, it identifies and discusses many of the critical factors that would affect estimates of various proposals.”

The budgetary impact of any health care reform proposal will be critical to its eventual success. The CBO document lays out in significant detail how it will go about measuring that impact. In doing so, the CBO provides a host of statistics, graphs and data that will be bandied about during the debate.

As if all this wasn’t enough to make Key Issues  a must read, Peter Orszag was Director of the CBO when the report was prepared. Mr. Orszag will be Director of the Office of Management and Budget in the Obama White House. In that role, he will have a great deal to say about the financial impact of various reform plans. Given his involvement, it’s not unfair to expect the Administration’s analysis to closely mirror the Congressional analysis described in Key Issues.

3.  Roadmap for Implementing Value Driven Healthcare in the Traditional Medicare Fee-for-Service Program,” by the Centers for Medicare & Medicaid Services.

The upcoming reform debate will be peppered with calls for “transparency,” paying for “value, not services” and for making commercial coverage as cost effective as Medicare. So it makes sense to see what the folks who run Medicare are thinking about concerning these issues. This report is CMS’ effort to help lawmakers “create rationale approaches to lessen healthcare cost growth and to identify and encourage care delivery patterns that are not only high quality, but also cost-efficient.”  The report describes the programs and demonstration projects already put in place by CMS to “foster joint clinical and financial accountability in the healthcare system.”

The CMS report is a tougher read than the other’s on this list. But given that any reform proposal will need to tackle skyrocketing medical costs, the report is worth the time.

I’ll add to this list in later posts, but these three items are a good place to start. And remember, if you think the reading list for health care reform is bad, just wait until you see the final exam.