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Got Medicare Quality???

May 6, 2009
by Mark Hagland
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Many in our industry are justifiably concerned about the outcome of the ongoing discussions over “meaningful use,” with potentially hundreds of thousands of dollars, maybe even $1 million or more, at stake, for many hospital organizations, as disbursements get sorted out within the next two years under the ARRA-HITECH legislation.

But far too few, in my humble opinion, have been following closely enough the fast-moving legislative developments taking place on Capitol Hill around Medicare payment reform, quite apart from the comprehensive healthcare reform that President Obama and his administration have promised will be brought to Congress later this year. And the financial implications of potential Medicare payment reform developments on the Hill would dwarf those of any HITECH disbursements that hospitals could receive in the next two years, by a factor of many times.

Just in the past several weeks, two proposals have come to Congress that typify what legislative leaders from both parties are looking at. On March 30, for example, Rep. Jason Altmire (D-Pa.) introduced his Quality FIRST (From Incentives, Reporting, Standards, and Technology) Act of 2009 (H.R. 1776), which would introduce pay-for-performance mechanisms across the Medicare program, beginning with heart attack, heart failure, and pneumonia care, and measures around surgical infections. Not only would H.R. 1776 reward the superior quality of some hospitals with bonus payments; it would fund those bonus payments by decreasing the reimbursement of poorly performing hospitals.

Similarly, Sens. Max Baucus (D-Mont.) and Charles Grassley (R-Ia.) publicly announced their proposal, April 29, both to create a similar incentive program for hospitals under Medicare (as well as for physicians), in some of those same clinical areas; Baucus and Grassley, the Chairman and Ranking Member, respectively, of the Senate Finance Committee, would also create a program under which some payments would be bundled for care across the inpatient, nursing home, and home healthcare sectors, for treatment of the same patients. The Baucus-Grassley proposal (not yet submitted into legislation) would also penalize physicians determined to over-utilize CT and MR scans.

There are several key points in all of this. First of all, some of these proposals, like the Baucus-Grassley proposal, are coming from very powerful members of Congress, and, in the case of Baucus-Grassley, are highly bipartisan. Second, these proposals are being offered irrespective of comprehensive healthcare reform legislation (though Sens. Baucus and Grassley have indicated they would make sure their legislation would not conflict with the flow of healthcare reform legislation, and might indeed be dovetailed with it), and these proposals and bills are focused on the already existing Medicare program, and are being built on top of P4P work that is already ongoing in various forms in the industry. And third, and most importantly, they reflect the increasing sophistication of legislators from both parties in Congress. With overall U.S. healthcare spending moving towards 17 percent of GDP, members of both parties, and from across the political spectrum, already agree that healthcare spending can no longer be sustained at the rate at which it is growing. Furthermore, as healthcare comes more and more under the legislative microscope on the Hill, it’s no longer just senior staffers who are fluent in the nuances of payment policy and quality initiatives.

And for CIOs and other healthcare IT executives and leaders, the implications are clear: it’s time now to lay the foundations for the capability to accurately and rapidly produce public reporting on clinical outcomes, as well as to be able to prepare for bundled payments. Soon, these kinds of schemas could be reality, and could require very high-volume levels of clinical and financial reporting from virtually all hospitals nationwide. So as important as it will be to prepare to fulfill the requirements of meaningful use, in order to receive funds from ARRA-HITECH, the financial consequences of these potential changes under Medicare could account for a factor of many times that of any HITECH funding hospitals could receive. Folks, the payment reform train could be leaving the station, not in a matter of decades, or years, but months. Don’t say I didn’t warn you.

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