Dr. O’Malley

It has survived a bitterly divided Congress and a polarized public, a narrow Supreme Court ruling, and a 16-day government shutdown triggered by an effort to defund or repeal it. Hailed by some as the most significant healthcare reform in a half-century, it is also roundly scorned by others as an ill-advised debacle.

With some of its most hotly contested provisions now taking effect, the Affordable Care Act—or Obamacare, as both backers and detractors now call it—has been the object of admiration and animosity, of optimism and consternation. Its supporters have pointed to the promise of unprecedented access to healthcare for millions, while its critics have pointed to the trickle of consumers able to access the main web portal during an error-plagued rollout.

Beyond the heated rhetoric, however, what will the complicated and quickly evolving elements of Obamacare actually mean for hospitalists and for healthcare access, affordability, capacity, and delivery? In the short term, analysts say so much change is happening all at once that it’s nearly impossible to predict how it might turn out.

“Everyone’s kind of holding their breath to see what happens,” says Ann O’Malley, MD, MPH, a senior fellow at the Washington, D.C.-based Center for Studying Health System Change.

One thing is certain: more reliance on hospital-based providers.

Dr. O’Malley

“I think there are a lot of things on a hospitalist’s plate right now. And hospitals, because of the cost pressures, are definitely looking to us to lead the way through this uncertain time,” says Rick Hilger, MD, SFHM, medical director for care management at Regions Hospital in St. Paul, Minn., and a hospitalist for HealthPartners.

Amid the upheaval, experts are seeing the signs of a few major trends. In the short term, one emerging theme is considerable geographical variation in consumer access and costs, and in pressure on providers.

“How this is going to feel will depend, to a great extent, on where you live,” says Leighton Ku, PhD, MPH, director of the Center for Health Policy Research at George Washington University School of Public Health and Health Services in Washington, D.C.

Dr. Ku

Analysts also have seen hints of more universal changes, including an accelerated trend toward the consolidation of provider groups, an added emphasis on team-based care, and significant momentum toward a pay-for-performance delivery model.

An Uneven Exchange

One of the law’s most visible and controversial elements, the health insurance exchange or marketplace, got off to a rocky start Oct. 1, 2013, when computer glitches hobbled the main healthcare.gov portal for 36 state exchanges and plagued many state-run sites as well.

While some state-run exchanges have generally earned high marks, others have struggled. Analysts are most worried about the balkiness of the main web-based portal, through which the majority of enrollees will have to pass. While older and sicker patients are generally more motivated to keep trying, the same isn’t necessarily true for younger and healthier people whose participation will be vital to help balance each state’s risk pool. Analysts sometimes call these people, “young invincibles.” Because they generally seek out care far less often than older consumers, their lower medical costs can help compensate for higher expenditures elsewhere.

If too few sign up, however, a state’s risk pool may be imbalanced toward costlier patients, causing insurance premiums to rise and creating a vicious cycle that destabilizes the market and makes more expensive insurance less attractive to younger people. Economists say the carrot-and-stick approach—offering subsidies to help lower-income people pay for premiums and gradually increasing financial penalties for those who choose not to buy any coverage—is likely to help. Nevertheless, supporters are nervous that malfunctioning exchange sites could cause would-be enrollees to delay or drop out, and, at the end of 2013, a worried Obama administration was scrambling to address the cascade of glitches.

Because the health insurance exchanges were highly controversial already, says Dr. Ku, who sits on the board of the Washington, D.C. Health Benefits Exchange Authority, every problem is likely to be magnified by critics. Although he doesn’t expect “huge changes” in physician payment rates from plans in the exchanges, he says varying degrees of competition could drive down insurers’ prices in some markets.

Doctors also are likely to encounter plenty of confusion among the newly insured, and Dr. Ku hopes educational sessions will help healthcare professionals take more of a leading role in helping patients navigate an often bewildering system.

“One of the most important things that a hospital can do to help in the beginning is to help on the enrollment end of things,” he says. “Help patients who don’t quite understand how to get in, how to use these systems.”

It’s too early to say whether the exchanges can still meet the Congressional Budget Office’s prediction of 7 million enrollees by the end of the 2014 enrollment period (and 13 million by 2015). But analysts say the composition of the risk pool—something that should be clearer this spring—may provide a glimpse into the ACA’s long-term financial viability.

Instead of a consistent pattern across the country, the exchanges will be shaped by local market forces, such as the number of competitors and the extent to which cheaper plans will try to limit access to providers. To minimize their costs, some exchange-based plans are promising in-network hospitals higher patient volumes in exchange for discounted reimbursements. Other hospitals now find themselves excluded from most private plans in favor of cheaper options.

In exchange for lower premiums, some of these insurers are offering “skinny networks” that give consumers more limited provider options.

“A primary objective in the marketplace is to offer the cheapest plan possible, and to do that the insurers are going to look at who are the least expensive providers,” says Christiane Mitchell, director of federal affairs for the Association of American Medical Colleges. Not surprisingly, some of the costliest providers tend to take care of sicker or higher-risk patients.

“It’s a very, very strong concern, and it’s one that we have been very vocal on since the enactment of the Affordable Care Act,” Mitchell says. The association also has expressed concern that lower-income patients buying into the cheapest plans may not have access to the specialty services they need the most. That possibility, she says, increases the importance of navigators helping the newly insured pick out the best plans.

A Question of Access

Another big question is how the healthcare system will accommodate the influx of newly insured. Because hospitals already have been the safety net for many patients lacking access to preventive and primary care, urgent and specialty care may go through a bigger adjustment period, says Dr. Hilger, who sits on SHM’s Public Policy Committee.

The growing provider shortage certainly won’t help. By 2015, the AAMC predicts a shortfall of 63,000 doctors, almost evenly split between primary and specialty care. By 2025, that number is expected to more than double.

Mitchell says the gap between supply and demand is worsening due to the sheer number of baby boomers entering Medicare. At the same time, she says, one in three doctors in the U.S. is now over the age of 60 and nearing retirement age. Whether through Medicaid or the marketplace, the ACA’s coverage expansion will exacerbate the shortages. “It’s not to the level of the boomers entering Medicare, but it certainly is having a major impact on access issues and exacerbating the shortage, again, across specialties,” she says.

Other analysts say the extent of the capacity problem will depend in large part on location.

“The truth is that the extent to which there are enough doctors or enough hospital beds is largely a function of geography,” Dr. Ku says. “So, if you’re in an urban area with lots of teaching hospitals, you probably have enough doctors and you probably have enough hospital beds. If, on the other hand, you’re in a poor, rural area, chances are you don’t.”

As both insurance and demand for healthcare expand, those areas that were having problems already “are going to be stretched even more,” Dr. Ku says.

Meeting demand also means training more doctors, and Mitchell worries about a pipeline that already is underfunded. Although medical school enrollment is at a record high, federal support for residency training has been frozen since 1997, meaning that the funded residency slots may not be sufficient to accommodate future graduates. Further declines in the clinical income that subsidizes training would place additional pressure on the educational mission of teaching hospitals, Mitchell says.

Joshua Lenchus, DO, RPh, FACP, SFHM, associate professor of clinical medicine in the division of hospital medicine at the University of Miami, says existing doctor deficits, the ACA’s new demands, and the growing medical training gap could swirl into a “perfect storm” of access problems. Longer delays in accessing primary and specialty care, in turn, could prevent timely interventions earlier during the course of a disease or condition.

“What it’s going to mean for hospitalists is that we’re going to see—over the short-term, maybe even the next three to five years—a real impact on when patients present, in terms of the acuity of their disease,” Dr. Lenchus says. That means sicker patients in the hospital.

Given the massive changes, observers like Mitchell and Dr. Hilger acknowledge that ironing out the rough spots will take time.

“There’s going to be two steps forward, one step back, but the simple question is: Was it ever OK to have tens of millions of patients who had no insurance or were underinsured and were using the emergency room as their primary care?” Dr. Hilger says. “I think, no matter what your political affiliation, that, in general, the answer is no.”

What it’s going to mean for hospitalists is that we’re going to see—over the short-term, maybe even the next three to five years—a real impact on when patients present, in terms of the acuity of their disease. That means sicker patients in the hospital.

—Joshua Lenchus, DO, RPh, FACP, SFHM, associate professor of clinical medicine, division of hospital medicine, University of Miami, member, SHM Public Policy Committee.

Costs All Over the Map

One of the plan’s biggest goals and part of its name—affordability for those patients—also seems to vary considerably by geography. A recent analysis by The New York Times, for example, found that 58% of all counties served by the federal-run exchanges offer plans from only one or two insurance carriers. The relative lack of competition in many markets has created some huge cost disparities in premiums between neighboring states, and even neighboring counties.

With so many factors influencing costs, both proponents and opponents have found fodder to bolster their case that the law is either making insurance more affordable or sharply increasing premiums. One important consideration, Dr. Ku says, is that all plans must now include 10 “essential health benefits,” such as maternity care and medications, for example, and cannot allow gender to be a rating factor. As a result, he says, the cheapest plans for a relatively healthy young man may cost more now, while costs for a woman or an older person with a chronic condition like diabetes may go down.

Although the new mandates were designed to improve insurance standards, they sparked another firestorm when millions of Americans began receiving policy cancellation notices in 2013. Because many private insurance plans sold to individuals no longer met the ACA’s minimum requirements, insurers began dropping those plans or requiring enrollees to switch to other, often more expensive, ones. In November, in an effort to stem the mass cancellations, President Barack Obama bowed to mounting political pressure and announced a reprieve that allows insurance companies to renew existing policies for another year. That attempted fix has not been so straightforward, however. Many insurers were reluctant to reissue cancelled policies, and multiple states, which have the authority to regulate insurance sold within their borders, declined the administration’s request.

If, in fact, the exchanges offer good insurance products that the public begins to accept and find that they have good information to make choices, it could affect the prevalence of employer-based insurance.

—Robert Berenson, MD, senior fellow, Urban Institute, Washington, D.C.

The Long View

Despite the intense focus on the first few months of health insurance enrollment, it may take several years before the markets begin to settle and other insurers waiting on the sidelines decide whether to participate. If they eventually succeed, the ACA exchanges could have several long-term consequences.

“If, in fact, the exchanges offer good insurance products that the public begins to accept and find that they have good information to make choices, it could affect the prevalence of employer-based insurance,” says Robert Berenson, MD, a senior fellow at the Washington, D.C.-based Urban Institute, a nonpartisan think tank focused on social and economic policy. Over many years, employers could begin moving their employees into exchanges rather than providing direct healthcare benefits.

If they prove viable, the exchanges also may help accelerate the trend toward more consolidation of physician practices or increase pressure to align with larger entities. Despite concerns over skinnier networks, for example, the more tightly controlled access to providers under certain plans dovetails with the ACA’s heightened emphasis on more integrated accountable care organizations (ACOs).

In fact, ACOs and other lower-profile provisions that enjoy more bipartisan support could ultimately play key roles in reshaping how healthcare is delivered in the U.S. Many of these reform efforts have been launched as pilots or demonstration projects. Salt Lake City-based healthcare consulting firm Leavitt Partners tallied nearly 500 ACOs through the end of July 2013, more than double the total in June 2012.

Other Obamacare provisions are levying fines based on excessive hospital-acquired conditions or readmissions and adjusting reimbursements based on e-prescribing, the Physician Quality Reporting System (PQRS), value-based purchasing, meaningful use of electronic health records, and other mandates.

“The overall theme is that the ACA is speeding up the move away from fee-for-service payment toward new payment methodologies that are going to be increasingly based on quality measures,” Dr. O’Malley says. “All of these are basically efforts to shift incentives away from rewarding volume of services toward value and quality of care for patients. And the crux of all of them is to try to get physicians to work together, not only with other specialists and their primary care colleagues, but also with other inter-professional members of their team.”

For hospitalists, it means relying more on nurses, physician assistants, and other support staff.

“In a collaborative agreement, where it’s a physician-led healthcare team, I think non-physician healthcare providers could help to support the physician hospitalists,” Dr. Lenchus says.

That extra help may be essential.

“I do think the workload will increase, and not just because we’ll have more people clamoring for healthcare and more patients who are sicker—remember, there are no more pre-existing conditions,” Dr. Lenchus says. “The other piece to this that goes outside the patient-physician interaction is that there’s a lot of additional regulations and administrative burdens, if you will, as individual hospitalists and as hospitals on the whole.”

The need to share resources to cut down on doctors’ workloads, Dr. O’Malley says, may be yet another factor in the accelerated rate of practice consolidation.

“There’s pressure among docs not just to function as teams but to consolidate among themselves either through physicians’ organizations like IPAs [independent practice associations] or becoming employees of hospitals,” she says. “That’s where you get economies of scale and shared infrastructure to do a lot of the things that the ACA is requiring of them.”

Consolidation or not, she sees plenty of potential for increased efficiency. Some medical groups may need to hire more support staff, whereas others may simply require more coordination and delegation among existing personnel to lighten the load and focus on priorities. The trick, Dr. Hilger says, is finding the right balance amid the dramatic change.

“Bottom line, it goes back to the triple aim that hospitalists should be aiming for: high quality, low-cost, patient-centered care,” he says. “I think the challenge over the next 10 years is how to find the sweet spot between all of those.”

Bryn Nelson is a freelance medical writer in Seattle.

Obamacare by the Numbers

Sometimes, numbers do tell a story. The Affordable Care Act has no shortage of them, and amid the densely packed provisions, regulations, pilots, demonstrations, fines, and other elements, a few numbers provide a glimpse of the intense wrangling that created both winners and losers in the healthcare reform effort.

One of the biggest numbers is also the mostly hotly contested: whether Obamacare will blow a hole in the nation’s deficit or lead to a trillion dollars or more in savings over the first two decades. In March 2010, the Congressional Budget Office predicted the latter, with savings of $143 billion through 2019 and a hazier guess of savings equivalent to 0.5% of gross domestic product—equal to $1 trillion or more—through the 2020s.

The problem? “That calculation reflects an assumption that the provisions of the legislation are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation,” the CBO wrote at the time. That prediction, at least, was spot on.

Amid the ongoing political back and forth, one point is often overlooked: Although still unsustainably high, per capita healthcare spending is now increasing at the lowest rate in decades. Robert Berenson, MD, an Institute Fellow at the Washington, D.C.-based Urban Institute, a nonpartisan think tank focused on social and economic policy, notes that the trend (starting in 2006) predated the recession. Likewise, it is occurring in Medicare, where most beneficiaries have first-dollar coverage. Instead of being a side effect of the sluggish economy, Dr. Berenson believes fundamental change is occurring on the provider side, and that the additional focus on reform may be making a difference.

Some analysts, he says, believe that providers are responding to the anticipation of change in the system and are beginning to change their own behavior accordingly.

“That means we have more time to get it right, in terms of wholesale change in how healthcare is delivered, and, for me, that’s a good thing,” he says.

A few other numbers of note:

$1.075 trillion

The state- and federal-run healthcare exchanges are expected to cost $1.075 trillion through 2023, according to the CBO. That eye-popping number includes spending for “high-risk pools, premium review activities, loans to consumer-operated and -oriented plans, and grants to states for the establishment of exchanges.”

The big question, of course, is whether that investment will pay off, and a big part of the answer will rest with a well-balanced risk pool. In other words, long-term financial stability means getting as many young and healthy people into the exchanges as possible.

$2 billion

The ACA sought to increase competition by supporting the creation of consumer co-ops, despite opposition from the insurance industry. By the end of last year, HHS had doled out roughly $2 billion in loans to nonprofit co-ops in 23 states, as part of its Consumer Operated and Oriented Plan (CO-OP). Backers of these co-ops had initially sought $10 billion, however, based on estimates of what would be required to ensure a higher likelihood of success.

Although preliminary evidence suggests that these newcomers may be helping to drive down costs in some states, a lack of additional funding has prevented other potential co-ops from receiving startup loans. The co-ops also are barred from using any federal money for marketing, cannot jointly negotiate contracts with doctors, and have limited access to the large employer insurance market—casting doubt on their continued viability.

$0

On Sep. 30, 2010, the U.S. comptroller general appointed 15 members to the National Health Care Workforce Commission, an acknowledgment that the country needs more guidance in how to address existing shortages—expected to widen—in doctors and other healthcare providers. The commission, authorized by the ACA, has never met, however. The act didn’t appropriate any money for it, and Congress has yet to approve any funding either, meaning that the commission’s members are legally barred from conducting any work.

—Bryn Nelson, PhD

Hospitalists Will Be Critical to Obamacare Success