www.medscape.com
The Affordable Care Act and Academic Medical Centers
Ian L. Taylor; Ross Mcvicker Clinchy
Clin Gastroenterol Hepatol. 2012;10(8):828-830.
Abstract and Introduction
Introduction
This article is based on concepts first outlined in a publication by the authors entitled "Impact of Health care Reform on Academic Medical Centers."[1] The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 20101[1] seek to expand health care coverage by providing affordable health care for more than 95% of all Americans while reducing health care costs. Although these 2 goals appear to be contradictory, there was an implicit suggestion when the PPACA was first proposed that changes in systems of care delivery and payment reform would in and of themselves also result in significant cost savings. While PPACA does provide financial incentives to explore different approaches to the delivery of care including patient-centered medical homes, accountable care organizations, disease management programs, and health care innovation zones, whether they will result in significant cost savings in either the near- or long-term is less certain. Furthermore, because PPACA has immediate reductions in payments to existing sectors of the health care system, the downstream results of changes in funding are worrisome. Specifically, we fear that academic medical centers (AMCs) may be disproportionately affected by these reductions.
PPACA's Impact on AMCS
It has been estimated that PPACA will add 32 million Americans to the ranks of those with health care insurance, 16 million of whom will be covered by Medicaid.[1] Fee-for-service Medicaid is not a good payer for physician professional services and as a result, many physicians have felt forced to decline new Medicaid patients. Although PPACA mandates that the Medicaid payment rates to primary care physicians be no less than 100% of Medicare payment rates in 2013 and 2014, these rates will only be available for those 2 years.[1] Primary Care physicians will also see a 10% increase in current Medicare payments for 5 years. These increased rates will not, however, apply to subspecialty professional services and as a result referral of the increased population of Medicaid patients may become financially challenging for AMCs practice plans which are largely built on a foundation of subspecialty care.[1]
Under the new legislation, Centers for Medicare and Medicaid Services (CMS) will reduce payments to hospitals by $158 billion over 10 years to help cover the cost of the newly insured.[1] PPACA's financial impact will be most profound on those centers that have safety net hospitals in their system.[2] Most importantly, for these institutions, Disproportionate Share Hospital (DSH) payments by Medicare and Medicaid, will be phased out. DSH payments, which have traditionally compensated hospitals for the costs of caring for the uninsured and the indigent, have been critical to "safety net" hospitals and their associated AMCs. In theory, an increase in the number of insured patients seeking care at AMCs would help offset the loss of DSH payments. However, given inadequate Medicaid reimbursement and the 5% to 10% of remaining uninsured Americans and undocumented migrant workers who will seek care at safety net hospitals, AMCs can anticipate dramatic decreases in revenues.
PPACA's Impact on Medical Education
Safety net hospitals are an important component of the education of physicians and health care workers in this country. Furthermore, all teaching hospitals that train residents have been reimbursed for the costs entailed through both Direct and Indirect Medical Education payments. Federal support of resident training has not changed since 1997 when Congress capped the number of training slots supported by the CMS as part of the Balanced Budget Act, and the PPACA does not do enough to change this given the predictions of major physician shortages.[1] Indeed, PPACA[1] requires CMS to take back 35% of unused Graduate Medical Education slots and redistribute the remaining 65% to rural and underserved areas. Moreover, the future of all Direct and Indirect Medial Education payments is uncertain as Congress is currently discussing cuts to graduate medical education as part of its deficit reduction plans.
PPACA's Impact on Future Health Care Delivery Systems
The new legislation[1] does attempt to stimulate health care innovation in order to absorb the impact of the expansion of coverage and shifts in funding. PPACA contains provisions for hospitals to receive federal incentive payments for "meaningful use" of Health Information Technology and hospitals are embracing electronic medical records systems and e-prescribing.[1] However, the costs of these technologic transitions are substantial and may not be affordable for small group practices or for AMCs stressed by the developments described above. These costs could force physicians into employment within large group practices or financially secure hospital systems. AMCs that lack the necessary finances will be placed at a competitive disadvantage as they will not be able to compete for new government funding based on meaningful use of health information technology. These AMCs will also be poorly placed to take advantage of new revenues from clinical research that will be built around the ready accessibility of clinical outcomes data. They will be further financially disadvantaged based on their inability to collect the required quality data that will determine a significant component of their reimbursement under PPACA.
PPACA establishes the Medicare Shared Saving Program (MSSP) for Accountable Care Organizations (ACOs), an approach that many AMCs will undoubtedly attempt to pursue.[1] The stated goal of MSSP is to achieve better care for individuals, better health for populations, and slower growth in costs through improvements in care. An ACO must assume responsibility for the care of a clearly defined population of Medicare beneficiaries and if it succeeds in delivering high-quality care while reducing costs, it will share in the cost savings with Medicare. However the ACO will receive less monies than it would have under the old fee-for-service reimbursement. If the ACO saved 10% of the prior year's cost of caring for this defined population, it would only receive a proportion of the savings as a bonus at the end of the year and would in reality experience a reduction relative to the reimbursement it received in the prior year. AMCs will be forced to decide whether assuming financial risk if they do not reduce costs is a financially viable option for them. The cultural barriers inherent within AMCs that will have to be overcome if the AMC is to provide high-quality patient-focused care while assuming financial risk are substantial.[1] One fear is that government and private payers will shift the financial risk of taking care of the sickest and most expensive patients to ACOs.
The American Hospital Association estimates[1] that it would cost between $11.6 million and $26.1 million to build the ACO infrastructure and run it for the first year. In contrast, CMS estimated these costs to be only $1.8 million. CMS' ACO proposal is based on the results of a demonstration project[1] in which the participating organizations were predominantly large medical centers with well established infrastructures. Despite this, only half of the participants were able to share in the financial incentives under MSSP. Furthermore, none of the participants were able to recoup their initial investment by the third year. CMS' proposal appears to transfer too much risk to the ACO relative to the potential rewards, and CMS may need to consider providing capital to fund the infrastructure required to establish physician- or hospital-led ACOs. However, this seems unlikely given the level of the national debt and the current era of national austerity.
In contrast to these concerns, Berkowitz and Miller[3] see PPACA as an opportunity for AMCs "to modernize their approaches to research, education, and care." They believe AMCs are "well positioned to spearhead efforts to develop, pilot, and disseminate new patient-focused measures and models of care." They point to new sources of funding that PPACA brings within the Patient-Centered Outcomes Research Institute ($500 million in research funding annually by 2015) and the Center for Medicare and Medicaid Innovation with $10 billion to spend over 10 years to support innovation grants to develop new care delivery models. However, the authors[3] also stress that each AMC will have to assess whether it is positioned to assume the financial risk associated with becoming an ACO. They emphasize that AMCs will have to abandon departmentally based care in favor of multidisciplinary centers to promote patient-centered care. In addition, they believe AMCs' promotion and tenure system will need to change so that it appropriately recognizes faculty's contributions to high-quality, cost-effective patient care.
PPACA's Impact on Subspecialists
A recently released federal report[4] demonstrates that 1% of Americans accounted for 22% of all health care costs in 2009. The average cost of care of these individuals was $90,000 per person that year according to the Agency for Health care Research and Quality. Furthermore, just 5% of Americans account for 50% of all health care costs in 2009 or about $36,000 each. The monumental challenge for the nation is to stop the steady rise in health care costs by providing good quality health care for all Americans at an average cost of $10,000 per person per year for a total of approximately $3 trillion a year in national health care expenditures. We would argue that this goal can only be achieved by controlling the costs associated with the care of these very complex patients and that this will necessitate involvement and even a primary role for subspecialists. Furthermore, the profession and the nation must address the ethical issue of futile interventions which inappropriately prolong the process of dying, denying patients the right to a dignified death when such an end is inevitable.
We do not negate the importance of ensuring adequate primary care and believe this should be oriented around teams of primary care physicians, nurse practitioners, and physicians' assistants. An adequate primary care base should heal some of the depressing aspects of our current health care system by ensuring such essential services as adequate prenatal care for pregnant women. However, we would argue an expansion of primary care will not significantly impact the cost of care of the 5% of Americans with complex diseases who consume 50% of the nation's health care dollars. We believe the focus on primary care within PPACA, while important, is a distraction from the fundamental problem of the huge costs of taking care of our sickest citizens many of whom are cared for in AMCs. Indeed, health care costs may well increase as a result of restricting access of these unfortunate patients to subspecialists or quaternary care centers they need. A recent article[5] written in support of a "robust primary care physician workforce" outlined the "promise and peril for primary care" under PPACA. However, the author[5] acknowledged that "any system of capitation invites institutions and individuals to discover ways to avoid caring for complicated and expensive patients." If this is the ultimate outcome of PPACA then it will have done a great disservice to our most vulnerable citizens and we fear will place additional financial and clinical stress on AMCs.
Despite our significant reservations about the ultimate success of PPACA, we continue to support[1] the primary goals of health care reform: the expansion of coverage to "near-universal" levels, and containing the cost of health care to a level that our economy can sustain. However, we are also aware that the financial challenges entailed in enacting PPACA will be difficult for academic medicine and this may lead critics to see academic medicine as an obstruction to change. We believe, however,[1] that the deep expertise that academic medicine can bring to bear in the diagnosis and treatment of disease, in working collaboratively with teams of health care professionals, in the value that a culture of investigation can bring to the questions of comparative effectiveness—and the fact that most of the next generation of doctors, nurses, and other allied health professionals are being, and will be, trained in these venues—means that AMCs can and must be part of the solution to the current problems with our health care system.
References
Taylor IL, Clinchy RM. Impact of health care reform on academic medical centers. Gastrointest Endosc Clin N Am 2012;22:29–37.
Beaty P. Will safety net hospitals survive health reform? Available at:
Will safety net hospitals survive health reform?. Accessed July 21, 2011.
Berkowitz SA, Miller ED. Accountable care at academic medical centers–lessons from Johns Hopkins. N Engl J Med 2011;364:e12.
Kennedy K. Just 1% of patients drive American health care spending. USA Today, January 12, 2012.
Goodson JD. Patient Protection and Affordable Care Act: promise and peril for primary care. Ann Intern Med 2010;152:742–744.
Clin Gastroenterol Hepatol. 2012;10(8):828-830. © 2012 AGA Institute
