Preparing for Health Care Reform: Implications and an Action Plan for Providers

The Patient Protection and Affordable Care Act (PPACA) is now law. And while federal reform legislation may evolve over time, absent outright repeal, the new law will reshape America’s delivery system—with significant implications for hospitals, physicians, and other providers nationwide.

For leaders in the trenches of health care administration, it is time to develop localized game plans to address legal and operational challenges associated with health care reform.
In this week-long series, we will post five articles that will help you understand the primary areas targeted by new health care legislation so you can focus your efforts accordingly and position your organizations for the transformative changes that lie ahead.

• Major Themes of Health Care Reform, Part One
• Major Themes of Health Care Reform, Part Two
• Five Action Items for Health Care Executives and Board Members, Part One
• Five Action Items for Health Care Executives and Board Members, Part Two
• Five Action Items for Health Care Executives and Board Members, Part Three

Major Themes of Health Care Reform for Providers, Part One

Putting aside hotly contested issues such as the proper scope of federal authority and the cost of expanded coverage, the new law has pragmatic implications for health care providers in five broad areas that will affect provider activity in a number of different ways.

Quality, Value, and Cost Management
PPACA aims to reshape hospital and physician behavior and economic incentives by increasingly rewarding the variables of quality, value, and cost value, rather than conventional payment by volume of service delivered. In this vein, the Department of Health and Human Services (DHHS) is charged with implementing specific initiatives, which include:

• Authorizing several quality- and value-based demonstration and pilot programs involving accountable care organizations, value-based purchasing, and bundled payments under Medicare and Medicaid
• Establishing by 2012, the Center for Medicare and Medicaid Innovation to test innovative payment and service delivery models, and a value-based payment modifier to provide differential payments to physicians based upon quality and cost
• Expanding the Physician Quality Reporting Initiative (PQRI), and converting PQRI to a “report or be paid less” regimen beginning in 2016

Primary vs. Specialty Care Distinctions
In various respects, the new law is decidedly pro-primary care and arguably hostile to certain high-end specialty services, as illustrated by the following changes:

• Providing bonus payments for primary care evaluation and management services beginning in 2011
• Changing reimbursement and utilization rules for expensive diagnostic imaging services (e.g., MRI, CT) to effectively reduce reimbursement for these services
• Restricting an established Stark Law exception to limit development of physician-owned hospitals beginning in 2011 and imposing other restrictions on surviving physician-owned specialty hospitals thereafter

Tomorrow’s post will cover Transparency; Oversight, Responsibility, and Accountability; and a look at the Enhanced Need for Attention to Regulatory Compliance.