House Democratic Health Reform Bill Provides Only Preview of Provider Payment Changes
The Facts
On June 19, 2009, House Democrats unveiled their first draft of health care reform legislation. Despite exceeding 850 pages, the draft bill is still a work-in-progress. Many of the anticipated Medicare program payment reductions and revisions are absent from this draft, but providers should not draw too much comfort from that. President Obama has called for more than $600 billion in savings from Medicare, and those savings will be required to pay for the massive overhaul. Providers should still expect significant savings provisions to be added later.
In the meantime, the bill still includes considerable change, including:
- Annual Medicare payment updates for virtually every facility type, including all hospitals and post-acute care providers, would be reduced by a productivity adjustment factor. Given that hospital market baskets are expected to be between 2.0 and 2.5 percent in FY 2010, the actual update for providers, if this change were to be enacted, could be only slightly above zero.
- Medicare payment for post-acute services would be revamped and coordinated across settings.
- Medicare payments for imaging services would be reduced.
- Hospitals would be penalized for excess readmissions.
- Ambulatory Surgery Centers would for the first time submit cost reports and quality data.
What’s at Stake
The proposed bill foreshadows a new reimbursement paradigm that focuses on accountability for quality, cost savings, coordinated care, and increased scrutiny to preclude conflicts of interest and other skewed incentives. Health care service providers will face new systems, obligations and incentives that will dramatically alter how providers furnish services and interact with Medicare and its beneficiaries.
Steps to Consider
- Examine current approaches to patient care and consider internal and external steps necessary to manage the impending shift from traditional fee-for-service payments to payments based on quality measurements and care coordination.
- Explore relationships with management companies or other partners who can improve overall quality and reduce cost.
- Consider new relationships with physicians to invest doctors in quality outcomes.
