Wednesday, June 16, 2010

Healthcare Reform: The Good, The Bad, and The Ugly (Part 1)

Most of my colleagues are dreading the full implementation of the new healthcare reform law and hoping that the Republican surge expected in elections this November will lead to blockage of most reform measures before they start. A few CEOs with higher Medicaid populations are quietly rooting for President Obama and expecting some positive developments. The truth is that there are some elements of the new bill that will be good for many hospitals, some that will be bad for most hospitals and some that will change things forever. Maybe ugly is too strong a word for this last category.

Let's start with the good. Provisions such as changes to insurance markets, malpractice reform demonstrations and funding to help hospitals with high volumes of preventable readmissions will help hospitals grow revenue while reducing costs. That is any hospital's quick formula for success. Let's look a little deeper at these.

Insurance coverage will be expanded to 32 million people who do not currently have insurance and mostly fall in hospitals' bad debt and charity categories. This expansion of coverage will occur by increasing regulatory oversight of commercial insurers, using tax codes and subsidies to mandate coverage, and creating state based exchanges to improve accessibility, transparency and efficiency of insurance markets. This last step of state based agencies is already off to a bad start with most states declining the option to run their own programs and instead letting federal programs operate in their states for this purpose. It appears that this aspect of healthcare reform is grossly underfunded. We will wait and see how overall funding for the additional coverage works out.

With Democrats controlling all aspect of the new healthcare reform law, no one expected it to include any sweeping malpractice reform which if done right could save many billions. But it does include $50 million over five years for malpractice demonstration projects. The money will be used to explore alternative methods to resolve medical liability claims, such as health courts and early offer programs. Its not a lot but at least its a start.

Facilities fighting high readmission rates will be able to join a five year Medicare pilot program to reduce them. The program starts next year and gives priority to small community hospitals and those with high undeserved populations. Hospitals will be paid to intervene on patients who are at high risk for readmission using tools such as comprehensive medication reconciliation at discharge. I certainly appreciate this approach over the current mentality of just denying hospitals payment for readmissions regardless of the cause. Reimbursing someone to prevent readmission makes a lot more sense.

This is pretty much it for the good. The next two days I will talk about the bad and the ugly.

More on this later.

Mark Brodeur

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