Weathering the ‘Perfect Storm?’
The era of the Affordable Care Act is upon us, and short of an unlikely repeal following midterm elections, this will remain the law of the land. As surgical residents, most of us have neither the time nor mental stamina to become significantly entrenched in politics. As a result, many of us know less about the impact that the Affordable Care Act will have on our future livelihood than many of the Senators did when they passed the bill on December 24, 2009. While most of the public focus has been on the individual mandate, pre-existing conditions, and insurance exchanges, further hidden from the public eye are the methods by which our fundamental model for health care reimbursement will change.
Much of the mystery was dispelled for me this May, when I heard a lecture entitled "The Perfect Storm: The Affordable Care Act and the Repeal of the SGR" by Dr. Jeffrey Rich. Dr. Rich’s presentation was the 2014 Norman E. Shumway, MD, Visiting Professorship Lecture at Stanford (Calif.) University, a webcast of which is available at https://ctsurgery.stanford.edu/media/.
Dr. Rich has a unique perspective on the issue of health care reimbursement, as he has served both as president of STS from 2012-2013 and director of the Center for Medicare Management, part of the Centers for Medicare & Medicaid Services, in 2008, in the political tumult leading up to the passage of the Affordable Care Act. On top of this, he has remained a practicing cardiothoracic surgeon in the Sentara Health System and sits as director-at-large for the Virginia Cardiac Surgery Quality Initiative. It is impossible to overstate the impact that he and his staff have had on the future of health care reimbursement. His recent lecture highlighted the ideological change in payment models that the Affordable Care Act embodies, along with the carrots and the sticks that the government will be wielding over the next 5 years to change physician and hospital behavior. This, along with the untenable continuation of the Sustainable Growth Rate (SGR) with all of its problems, portends huge swings both positive and negative for the reimbursement of all doctors, and cardiothoracic surgeons in particular. Early adopters may find themselves with a much-needed windfall, while those who do not anticipate the changes may find themselves in dire financial straits.
First, let us examine where we stand. The United States spends 17.6% of its gross domestic product (GDP) on health care. The nearest rival sits at 12%. State and federal government together spent $1.5 trillion on health care in 2013. Add private insurance into the mix and the figure is $2.8 trillion. Our life expectancy has not followed the money, and the rate of increase in health care spending is far outstripping inflation and the growth in our GDP. Our spending has increased exponentially since the passage of the Social Security Amendments of 1965 and shows no sign of slowing down. These statistics are well publicized, and should no longer be a surprise to anyone.
Keeping in mind that hindsight is 20/20, it seems obvious how we got here. The private health insurance industry took off during WWII, when competitive wage controls were put in place to keep skilled laborers in jobs supporting the war effort. To compete for laborers, private sector employers began offering health insurance policies. Shortly thereafter, public pressure to provide a health care safety net culminated in the creation of Medicare and Medicaid in 1965, and our complex public/private health insurance environment was born. For the first decade or so, physician reimbursement was based on "reasonable charge," meaning that doctors sent a bill to Medicare and, if it was considered reasonable, the doctor was paid. This fee-for-service model can be seen as a blank check of sorts, in that it contained few stipulations to withhold repayment for redundant or unnecessary tests and procedures. Expenses associated with complications also were reimbursable. The incentive to "do more" was set. It is worth noting that the Social Security Amendments of 1965 are federal law, and the law stipulates that reimbursement is tied to the amount of work that a physician performs, which also forbids associating reimbursement with the quality of work that the physician produces. It takes an act of Congress to change such law.
The Affordable Care Act is that act. Dr. Rich’s work at CMS paved the way for the inclusion of "Title III: Improving the quality and efficiency of health care," which allows Medicare and Medicaid reimbursements to be altered based on efficiency and outcomes, moving away (although not disintegrating) the fee-for-service model. It incentivizes the development of Accountable Care Organizations and Clinically Integrated Networks to encourage cross-specialty collaboration within the fee-for-service model and lays the groundwork for physician and hospital reimbursement to be based on high-quality, efficient, and appropriate care.
