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Healthcare Reform:
Memo from Lynn Massingale, M.D., Executive Chairman
and Greg Roth, President and CEO
KNOXVILLE, Tenn., September 2, 2009 –When Congress returns from its August recess on September 8, healthcare reform will be at the top of its agenda. President Obama, who originally wanted a bill to sign before the recess, recently guaranteed that such will be the case by year-end, so pressure will be on the House and Senate. The President and many Democrats would like to have a single bill with bipartisan support. However, the Democrats could push through any bill if they all agree to its elements, which as of this writing they have not, or if some Republicans support it, which they say they will. The punch line: healthcare reform legislation could become law within a few weeks!
Proposed Elements of Healthcare Reform
What is being proposed, what are the obstacles, and what might be the impact on patients, hospitals, physicians, other clinicians, and taxpayers? President Obama outlined eight principles he wanted to see addressed in healthcare reform legislation:
| 1. | Protect families’ financial health |
| 2. | Make healthcare affordable (lower cost) |
| 3. | Aim for universal coverage |
| 4. | Provide portability of coverage (for a change in employment status) |
| 5. | Guarantee choice |
| 6. | Invest in wellness and prevention programs |
| 7. | Improve patient safety and quality of care (including pay for quality of outcomes, not volume) |
| 8. | Maintain long-term fiscal sustainability (must be budget-neutral via cost cuts and increased taxes) |
Congress took those broad principles and developed a variety of bills that ultimately must be reconciled into a single bill for the President to sign. The most common themes of those bills and of the goals of the Democratic majority are:
| 1. | Coverage for all uninsured—about 45 million people—with sliding scale subsidies for the poor, utilizing varying definitions of poor. Of note is the exclusion of coverage for approximately 12 to 15 million illegal immigrants in the U.S. |
| 2. | Mandatory purchasing of health insurance by everyone not covered by an employer-sponsored plan or existing government plan, such as Medicare, Medicaid, Champus, etc. |
| 3. | Portability of coverage when changing jobs, guaranteed coverage for those with a pre-existing condition, and increased payment for preventive and primary care services. |
| 4. | Various ideas regarding payment for quality and outcomes, including a national medical review board to determine comparative effectiveness of drugs and treatments and increased deployment of healthcare information technology. |
| 5. | Development of a new government-run “public option” insurance product that would compete with private insurers. |
| 6. | Reduced payments to hospitals and providers—which is opposed by the American Medical Association (AMA)—combined with: (a) higher taxes on people earning more than $250,000/year (although lowering that threshold “has not been ruled out,” per the White House), (b) taxing the value of health insurance provided by employers, and/or (c) eliminating deductibility of insurance costs when provided by employers. |
Other ideas and proposals with varying support include the concept of medical home, accountable care organizations (think capitation in the heyday of HMOs), bundling of payments for an “episode” of care (whereby the hospital and all physicians would share and divide a single payment made for a given individual patient admission), gain sharing with providers for cost savings, etc.
Some Considerations on the Challenges Facing Healthcare Reform
Notably absent in the discussions is any mention of tort reform, which the President stated at a recent AMA convention was not going to be addressed. The AMA has strongly lobbied for some measure of tort reform in a national plan, and we are in agreement with that proposal.
We believe that coverage for the uninsured is a fabulous goal, but we also acknowledge the difficulty in discerning between those who are uninsured because they truly cannot afford coverage and those who voluntarily choose to opt out of coverage. Roughly half of the uninsured are younger people earning $50,000/year or more and choose not to purchase coverage. Additionally, regardless of your personal opinion about illegal immigrants, some of them do suffer from illness and injuries, and no bill is likely to provide coverage for this group—a critical economic issue for hospitals and clinicians, especially in the emergency department.
We believe there is waste in healthcare through duplication of services, the defensive practice of medicine, and incentives for volume. However, we do not believe that the current information technology systems being proposed and deployed will drive big cost savings, at least in the near term. From personal experience, we know that, so far, emergency department information systems tend to slow down our physicians, nurse practitioners, and physician assistants and reduce our efficiency. While productivity will most likely improve over time as the systems themselves improve, any resultant cost savings will be delayed.
We believe that portability of insurance, guaranteed coverage, and increased payment for preventive and primary care services are all good for patients. However, the current U.S. healthcare system has little—if any—capacity to absorb 45 million new patients with new insurance and a pent-up need for primary care. If primary care reimbursement increases—and gradually the medical education dollars follow—then theoretically the shortage of primary care physicians will be alleviated, patients will have increased access, and ED volumes should decline, albeit slowly. For these same reasons, ED patient volumes have significantly increased in Massachusetts following the adoption of universal and mandated coverage.
We believe that methodologies should be developed to measure and reward quality, and that techniques to determine and foster evidence-based best practices can reduce variation, improve quality, and reduce costs.
The Public Option Insurance Plan
It remains to be seen whether the public option plan is a way to “keep the insurance companies honest,” as recently stated by the President, or is the first step toward an ultimate single-payer system like Canada or Great Britain, as some Republicans contend. Regardless, both sides agree that if the public option plan is adopted, commercial insurance companies will be forced to charge lower premiums to compete with the public option rates that will likely resemble Medicare, which is much lower than current commercial rates. Both sides agree that commercial insurance companies will be forced to pay physicians and hospitals less in order to remain competitive against a government-run public option. This is very significant for all of us when you consider that nearly all of the revenue that we collect on behalf of physicians, nurse practitioners, and physician assistants comes from these sources.
Impending Cut in Medicare Rates
As an important aside, absent a Congressional budgetary fix or legislation proposed in the overall healthcare reform discussions, Medicare rates for all physicians are currently set to be reduced on January 1, 2010, by 21% as a result of the existing rate-setting formula known as the "Sustainable Growth Rate" (SGR). While the President's proposed budget to Congress earlier this year attempts to address this anomaly, without Congressional action, this devastating reduction is scheduled to occur.
Your Voice and Your Action is Needed
Some people on both sides of the Congresssional aisle and in healthcare believe that the healthcare reform initiative involves too much change too fast, fearing the unintended consequences of proposals imbedded in a 1,400-page bill. Others contend that the current system is fatally flawed and cannot continue without immediate and drastic changes.
For TeamHealth-affiliated physicians, nurse practitioners, physician assistants, and other clinicians who provide care to millions of patients annually—including 1.8 million with no insurance of any kind in most recent years—and to all TeamHealth employees, the implications of healthcare reform are wide-sweeping.
The issues facing Congress right now and the decisions they make when they return will have significantly more impact on how medicine is practiced and how providers are reimbursed than any other actions in our professional lives to date.
Our voices as caregivers, those who support caregivers, and patients have not been heard collectively on Capitol Hill. Right now is the critical time to weigh in on the elements of healthcare reform legislation you support and those you do not. We urge you to get involved in the next few days. Educate yourself on these topics and share your position on both the impending cut in Medicare rates and healthcare reform in general. Share what you’ve learned with your colleagues and friends so that everyone develops a clearer understanding of what can be gained—and lost—for all of us. Most important, contact your congressional leaders today and encourage them to vote to prevent Medicare reimbursement cuts from occurring and to vote for or against the elements of healthcare reform as you see fit.
To facilitate this communication for you, TeamHealth has established the Advocacy in Action web-based portal. Congress will finalize and vote on this legislation in the next few days and weeks. Please act now.
About TeamHealth
Founded in 1979, TeamHealth is headquartered in Knoxville, Tennessee, and is affiliated with approximately 6,200 healthcare professionals who provide emergency medicine, hospital medicine, radiology, teleradiology, urgent care, and pediatric staffing and management services to approximately 550 civilian and military hospitals, clinics, and physician groups in 46 states. More information is available at www.teamhealth.com or 800.818.1498.