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July 9, 2012
TOPEKA Republicans are working still to repeal it, but even before the U.S. Supreme Court ruled that the Affordable Care Act was constitutional, many of its major changes were under way for Kansas hospitals, doctors and other medical providers.
In fact, some representatives of doctor and hospital groups in Kansas and nationally say that many key requirements of the law were inevitable or bound to happen with or without the law, simply because the status quo of the health care industry was unsustainable because of its costs.
In 1965, U.S. health care spending accounted for about 6 percent of the gross domestic product; by 2009, it represented about 17 percent. One culprit for the rising cost, experts say, has been payment systems that reimburse providers more for the volume of their services than for the quality or effectiveness of the care.
“I don't want to downplay the significance of the (Supreme Court) ruling,” said Tom Bell, chief executive of the Kansas Hospital Association, “but I think it’s been clear for some time that a lot of the ways that the system is changing - the movement away from fee-for-service, value-based purchasing, those sorts of things - those things were going to continue whether this law was struck down or upheld. ... So from that perspective, (the decision) was maybe not quite as momentous as we’ve been hearing on the cable news networks.”
A report on the ACA by the national Physicians Foundation published soon after the law was passed in 2010 generally was negative about the reform’s anticipated consequences, particularly for the 32 percent of the nation’s doctors working in individual, private practices of one or two physicians. For them, the authors concluded, the law almost certainly means that their forms of practice “will be largely, though not uniformly, replaced” by new arrangements that will make many of them salaried employees of hospitals or larger group practices.
Nonetheless, the report concluded, “health reform was necessary and inevitable. The impetus of informal reform would likely have spurred many of the changes (required by the ACA) independent of formal reform.”
So as politicians continue to fight over the law, forward-looking hospitals and doctors for at least the past two years quietly have been preparing for and adopting its various provisions.
“The Supreme Court’s ruling keeps in place improved access to health care through expanded insurance coverage and important insurance reforms, which were key elements of the Affordable Care Act,” said Jeff Korsmo, chief executive of Via Christi Health, a Catholic-affiliated system that is the largest private provider of health services in Kansas. “The way we deliver health care has been changing since the Affordable Care Act took effect two years ago, and it will need to change even more dramatically in the years ahead.
“The growth in the cost of health care in the United States is simply unsustainable,” Korsmo said after the court ruling, “and it’s going to get worse because 10,000 baby boomers a day are reaching Medicare age. Those costs, combined with our federal and state governments’ fiscal challenges, all call for major change in health care.”
Catholic bishops and their ally Gov. Sam Brownback have been some of the ACA’s most vocal Kansas critics. But the trends that drove the writing of the law had been clear to hospital administrators for some time. Government and private payers alike were keen on developing systems that rewarded providers for quality performance and curbed ineffective or duplicative treatments. Eventually, experts say, that means more oversight, more standardization, more coordination and communication, and probably greater consolidation within the industry.
Within months of the ACA’s passage, Via Christi announced it would buy the Wichita Clinic. It was the acquisition of one of the state’s largest doctor groups by the state’s largest provider.
Dr. Richard Kenagy, the clinic’s chief medical officer, said at the time that the move would reduce fragmentation, improve the quality of care and help control costs to the benefit of employers and payers.
Here are some of the changes already under way in Kansas that were addressed or required by the ACA:
Effective Oct. 1, the law mandates that hospitals use a “value-based purchasing model,” which means they must meet certain quality benchmarks set by the federal Centers for Medicare and Medicaid Services.
One of the first benchmarks the hospitals must meet is reducing or containing the rate of hospital-acquired infections.
The Kansas Hospital Association, the Kansas Medical Society and other partners are working to reduce the rate of infections through the Kansas Healthcare Collaborative, which was formed in 2008, about two years before the ACA became law.
One of the collaborative’s initiatives is modeled on a Michigan hospital program that reduced infections and reportedly saved an estimated 1,200 lives per year in that state while reducing costs by $175 million a year.
The collaborative also is working with hospitals to reduce the rate of patient readmissions, another quality benchmark of the reform law.
For example, one member hospital has a policy barring “elective births,” or labor induced without medical necessity. The policy was so successful in reducing unnecessary readmissions, said Kendra Tinsley, the collaborative’s executive director, that other hospitals now are being taught to adopt it.
“Frankly, so far we feel like it’s been a big help,” Tinsley said of the federal health reform law. “It’s a pretty big chunk to bite off … but it’s definitely supporting a lot of great work in our state right now and some of this infrastructure development. I see it as really an investment in our state's ability to take this (quality of care) to the next level.”
Kansas hospitals federally designated as “critical-access” are not included in the “value-based” program, according to the Kansas Hospital Association. Critical-access hospitals are smaller, rural hospitals.
But the hospitals that treat the majority of Kansas patients are included in the program, which will pay Medicare incentives to the hospitals that meet the performance standards. The period measured for the first round of payments was from July 1, 2011, to March 31, 2012, and the incentive payments start in October.
The hospitals were preparing for the law’s new payment model even as the political and legal debate over the ACA raged on.
“Kansas hospitals have been gearing up by allocating extra resources to their quality improvement activities and have been collecting data and evaluating results to see where further improvement is needed,” said Cindy Samuelson of the Kansas Hospital Association. “Improved quality scores should result in better care for patients and increased savings for hospitals.”
Hospitals that meet the benchmarks will get more money. Those that don’t will get less.
“Hospitals will win or lose under this program,” Samuelson said, depending on how they score on quality.
Under the reform law, nonprofit hospitals also must meet some stricter requirements in order to maintain their tax-free status.
Every three years they will be required to complete an assessment of community needs, with the first round of reports due in March 2013. That work, likewise, is under way and has been for several months.
“Many Kansas hospitals are working on (the Community Health Needs Assessments) and many had a practice to regularly do a needs assessment even before it was a requirement” of the law, Samuelson said.
To help with the needs assessment, a partnership called Kansas Health Matters was formed that includes the hospital association, local health departments, the Kansas Department of Health and Environment, the Kansas Health Institute and others. The partnership’s website kansashealthmatters.org includes a “toolbox” for developing the needs assessments.
The health reform law also will require that nonprofit hospitals have written policies outlining the criteria patients must meet for financial assistance and what policies the hospital will follow in the event the patient cannot or does not pay.
The reform law also called for a major expansion of Medicaid eligibility nationwide. The Supreme Court decision essentially ruled that states have the option of adopting the expansion, which in Kansas would extend health coverage to an estimated 130,000 or more people.
Brownback has said he will continue to oppose the law and will not implement any portion of it until after the November elections in hopes it will be repealed by Republicans in the White House and Congress.
So it remains unclear whether Kansas will take part in the Medicaid expansion.
But it clearly would be of major consequence for the state’s medical providers, not least the state’s safety net clinics. Most of their patients are the working poor who lack any health coverage.
“If the Medicaid expansion is enacted, that will have a significant financial impact on our clinics, absolutely,” said Cathy Harding, executive director of the Kansas Association for the Medically Underserved, which represents the safety net clinics. “If it isn't enacted in this state, we'll continue to do business as usual.”
The KHI News Service is an editorially independent initiative of the Kansas Health Institute and is committed to timely, objective and in-depth coverage of health issues and the policy making environment. Find more about the News Service at khi.org/newsservice or contact us at (785) 783-2529.