On March 23 President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law, and on March 25 he signed the Reconciliation Act of 2010, which made additional changes. His signature capped a contentious yearlong legislative debate, which included bruising bare-knuckle politics and outpourings of intense emotions on both sides of the issue. While one cannot distill more than a thousand pages into a thousand words, this essay will address a few issues of great importance to academic health centers.
Passage of the PPACA, elements of which will be phased in over four years, is only a first step with much heavy lifting to come as the Obama Administration struggles to commence the marathon effort necessary to convert a massive piece of legislation like PPACA into regulatory policy. While Emory supports comprehensive health care reform and hopes that the coverage expansions contained in the thousand-page legislation results in the increased availability of low-cost health insurance for more Americans, we believe that work still must be done to lower health care costs, foster innovation, and create access to health care for all.
For example, PPACA proponents predict that 32 million Americans who are currently uninsured will gain coverage starting in 2014. They expect that roughly half will enroll in Medicaid, and the remaining 16 million will purchase insurance through the new exchanges authorized by the legislation. If so, almost 20 million individuals will still not have health insurance, and the legislation expressly prohibits coverage for undocumented immigrants. It is crucial that a safety net be maintained to compensate health care providers who will continue to provide care for the uninsured. Currently, Medicare-funded Disproportionate Share Payments (DSH) are used to help compensate providers who see these patients. There is concern that the cuts to the DSH program after 2014 to help pay for PPACA provisions may create hardship for providers who will care for the remaining 20 million uninsured patients.
Then there is the question of the health care workforce. While PPACA will surely expand health insurance coverage, Emory believes the act does not do enough to ensure that the newly insured will have access to care by a physician or health professional. Today, long before PPACA coverage expansions go into effect, our nation faces a significant shortage of physicians. Before the PPACA passed, the Association of American Medical Colleges (AAMC) predicted that the U.S. faces a shortage of 125,000 new doctors by 2025. According to AAMC, the need for new primary care physicians is particularly acute. These shortages will surely be exacerbated as the newly insured look to find their medical home and seek health care in new ways starting in 2014.
As it takes up to seven years to fully train a generalist physician, Congress and President Obama must act now to address the workforce issue. Their first step should be to expand federally funded Graduate Medical Education residency positions. These spots, allocated by the federal government, have been frozen in place since the passage of the Balanced Budget Act of 1997. This problem is particularly keen for Sun Belt states like Georgia, which has seen its population increase by nearly two million since 1997, leaving us with one of the lowest medical resident-per-capita ratios in the nation.
Medicare and geographic variations
One debate that continues to rage on in Congress and the Obama Administration is what geographic variation in Medicare means in terms of efficiency and quality of patient care. On one side, proponents who support the creation of new regulation and funding incentives to reward low cost providers rely on research conducted by Dartmouth University. This research, compiled and published as the Dartmouth Atlas of Health Care, looks at the amount hospitals bill to Medicare for patients with a chronic illness who were in their last six months or two years of life. The Dartmouth researchers found wide variation, and some use it to conclude that providers in the Upper Midwest and rural areas provide care more cost effectively than those in large urban centers and the South. During debate on PPACA, it was suggested that using the Dartmouth Atlas as a basis for regulation could net as much as $700 billion a year in cost savings.
Others, like Emory, who oppose a new regulatory scheme based on the findings in the Dartmouth Atlas, argue that while the research does identify variation, such differences are not so easily explained. For example, we believe that wage and income status, not used as a factor in the Atlas, has an impact on cost of care. Further, it does not adjust for the recognized costs and additional payments to teaching hospitals for education residents through Direct Medical Education and Indirect Medical Education payments. We also suggest that the Atlas does not adequately account for severity of illness or the higher costs associated with caring for the poor who have had years of deferred health care or other social and behavioral disadvantages leading to poor health. Academic health centers routinely see more difficult, and therefore more costly, cases.
In order to pass the PPACA legislation, Congressional leaders negotiated an agreement that provided $400 million up front to address cost variation and asked the Institute of Medicine to convene two committees to study the issue. Secretary of Health and Human Services Kathleen Sebelius hosted a Geographic Variation Summit in September to discuss the issue in more detail.
An additional issue of immediate concern is that the potential benefits of PPACA could be greatly impacted by unrelated policy changes. During congressional consideration of PPACA, the hospital community negotiated an agreement with President Obama and Congressional leaders to limit the negative financial impact on hospitals to $155 billion over ten years. It was believed that such sacrifice was necessary to offset the cost of significant coverage expansion. That agreement did not take into account the imposition of significant financial burdens imposed on hospitals at the state and federal levels.
For example, nearly every state is faced with severe budget shortfalls. In Georgia, the state budget deficit exceeded $1.2 billion, with a shortfall in its Medicaid budget of almost $600 million. In response, the state imposed a “provider tax” of 1.45 percent of gross revenue on not-for-profit hospitals. Sapping resources in this way will make it harder for hospitals to adapt in a timely manner to changes and opportunities.
The classic American academic health center integrates clinical practice with research, teaching, and education. While we don’t know for sure the exact impact of PPACA on academic health centers, it is fair to say that the cross integration characteristic of an academic health center may position us to create the innovation and new thinking that will be necessary to make PPACA a success.
For providers, there are always four key areas on which to focus: managing costs, managing care, aligning an integrated care delivery network, and managing the health needs of patients in an accountable care network. We must find ways to deliver care in more efficient and effective ways. While this, of course, is an important focus with or without health reform, appropriate follow-up action by Congress and the Obama Administration will help us move forward..