Health Care Law Reform : Health Care Lawyer & Attorney : McDermott Will & Emery Law Firm : Managed Care, Product Regulations

Health Reform Provisions

The reimbursement models in the health reform legislation—including accountable care organizations, bundled payments and payments for quality—create powerful incentives for hospital/physician consolidation.  Strategic options include hospital acquisitions of physician practices or other, usually contractual, forms of hospital/physician clinical and financial alignment. In addition, many non-governmental payors have implemented or are planning similar reimbursement initiatives, which will further reinforce the hospital/physician consolidation trend. 

Your Next Moves

Hospital boards and senior managers should have as their first priority the development, and effective and rapid implementation, of a hospital/physician consolidation strategy appropriate to the realities of their markets. Leaders considering forming or joining a consolidated provider system should carefully analyze several factors at the next board meeting or strategic planning session. For instance, these consolidated provider systems will need the infrastructure, such as information technology, necessary to meet the reimbursement goals. Another key agenda item is whether the organizations have the financial strength to bear greater financial risk for the cost of care provided to patients. 

A hospital’s fate, and, perhaps, existence, in the post-2015 world of fully implemented payment reform will depend upon actions taken, or not taken, in the next year.

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The Facts

Both the House health reform bill, H.R. 3962 (Affordable Health Care for America Act), and the Senate version (Patient Protection and Affordable Care Act), include provisions (House Section 1301 and Senate Section 3022) establishing Accountable Care Organizations (ACOs).  ACOs are provider-centric organizations focused on the costs and quality of care received by a designated population of patients over time.  ACOs can consist of vertically and horizontally positioned providers, including physician groups and hospitals.  In its most basic concept, although paid on a fee-for-service basis, ACOs that meet quality-of-care targets and reduce the aggregate costs of care rendered to their patient population relative to a spending benchmark are rewarded with a share of the savings they achieve for the Medicare program.

What’s at Stake

Regardless of whether health reform legislation is passed, providers will be increasingly challenged to adopt operating models through which they are responsible and accountable for the quality, cost and overall care of a defined population of patients.  Emphasis will be placed on clinical processes and outcomes, the patient care experience and utilization.

Steps to Consider

• Evaluate why and assess those actions necessary to migrate from a financially driven model to a clinically integrated driven model if you previously operated a Physician Hospital Organization (PHO) that did not succeed. 
• Evaluate investments in infrastructure and redesigned care processes for high quality and efficient service delivery.
• Establish appropriate committees to explore and evaluate adoption of clinical best practices.
• Bolster capabilities to capture and report on quality measures.
• Coordinate with other providers to facilitate the sharing of effective strategies on quality improvement, care coordination and efficiency.
• Assess hospital-physician relationships and your ability to promote and sustain quality based initiatives.

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