Provider Payments & Healthcare Costs
Issue: The Patient Protection and Affordable Care Act (PPACA) included a number of policy changes aimed at rewarding positive patient outcomes and cost-efficient care, and moving away from payments based on the volume of services provided. However, the PPACA also reduced Medicare provider payments by $500 billion over 10 years to help pay for the law’s $1 trillion price tag. The PPACA also created the controversial Independent Payment Advisory Board to make binding recommendations to reduce Medicare spending. In 2013, further automatic across-the-board Medicare payment reductions will be implemented if Congress fails to pass consensus legislation by the end of 2011 to reduce the deficit by $1.2 trillion. There is broad consensus that continuing to reduce provider payments will threaten access to quality care services. Broad, long-term structural reforms to entitlement programs must be considered in order to address Medicare’s fiscal sustainability. Additionally, savings to the healthcare system, better quality, and more efficient care can be achieved by addressing the nation’s flawed medical liability system. The current medical liability system not only reduces accessibility to vital health services and contributes to rising costs, but also stifles medical innovation and the sharing of information that is critical to an evidence-based healthcare system.
HLC Position: HLC believes provider payments should be structured to encourage care coordination, reward quality care and positive outcomes in both the public and private sectors. Payments should appropriately reflect the quality of care delivered and pay for value. HLC is concerned that cuts to provider payments, to maintain program solvency, without long-term structural reforms, will further deteriorate patient access to quality health services. Modernizing Medicare into a quality-driven, more competitive model based on choice is one way Congress and the administration could help address the impending fiscal crisis faced by the program. Additionally, HLC is committed to addressing the nation’s liability lawsuit crisis to foster an environment that encourages learning organizations and reduces the practice of defensive medicine. By building on such initiatives, systems can be better engineered to curb excessive cost growth while also improving patient care.
HLC Key Recent Activity on Provider Payments and Healthcare Costs:
- HLC leads an informal coalition of stakeholders opposing the Independent Payment Advisory Board (IPAB) and utilized this group to conduct outreach and collect signatures for a letter asking lawmakers to repeal IPAB.
- In April, the letter opposing IPAB ultimately garnered over 500 signatories, representing a breadth of entities including all sectors of the healthcare industry, employers of different sizes and geographic locations, as well as purchasers of care, consumers, and patients.
- HLC works to educate congressional leaders about how a consistent, long-term policy to replace the Medicare sustainable growth rate (SGR) would increase innovation and improve quality across the entire healthcare industry. HLC emphasizes how the unpredictability in costs and revenues due to SGR negatively affects long-term strategies to improve healthcare through the innovative new approaches of HLC members and urges Congress to seek a long-term solution.
- HLC is closely tracking legislative activity examining possible FDA regulation of mobile medical applications, the impact of the medical device tax on these products, and the administration’s plans for imposing user fees on health information technology products.
- HLC is following the proposed 2014 budget for the Office of the National Coordinator for Health IT (ONC). It includes a new “user fee” on electronic health record vendors and developers to support ONC’s certification and standardization activities. The fee affects vendors who certify projects through the ONC certification program, and is estimated to total around $1 million.
- HLC is also closely tracking the newly created Food and Drug Administration Safety Innovation Act (FDASIA) federal advisory workgroup. HIT software could become subject to a new tax, depending on the results of this workgroup’s recommendations.
- The group is charged with providing expert input on issues and concepts identified by the FDA, ONC, and the Federal Communications Commission (FCC). It will inform the development of a report on an appropriate, risk-based regulatory framework pertaining to health information technology, including mobile medical applications, that promotes innovation, protects patient safety, and avoids regulatory duplication.
- On August 7, the FDASIA advisory workgroup reported its draft recommendations to the HIT policy committee that advises ONC.
- HLC tracks the regulatory implementation of the recently passed FDA user fee law.
- HLC President Mary R. Grealy and HLC staff have given speeches and presentations regarding the negative ramifications of the medical device tax and other fees and taxes that are a burden on all stakeholders, particularly consumers.
- HLC continues to monitor liability reform efforts. Increasingly, HLC looks to link the liability issue with the desire to elevate healthcare quality and patient safety, while still working with the Health Coalition on Liability and Access (HCLA) to support legislation, such as H.R. 5, which would cap noneconomic damages in medical liability cases. HCLA is also developing research to show how healthcare access and quality has improved in states that have enacted medical liability reform measures.