Clinical Gastroenterology and Hepatology
Volume 7, Issue 11 , Pages 1168-1173, November 2009

United States Health Care Reform in 2009: A Primer for Gastroenterologists

  • Spencer D. Dorn

      Affiliations

    • Corresponding Author InformationReprint requests Address requests for reprints to: Spencer D. Dorn, MD, MPH, Division of Gastroenterology and Hepatology, University of North Carolina, CB 7080, Chapel Hill, North Carolina 27599-7080. fax: (919) 966-2250

published online 23 July 2009.

Article Outline

The US health care system is characterized by staggering costs alongside limited access, uneven quality, and subpar health outcomes. Although federal policymakers have long acknowledged this health care crisis, there still has been no fundamental realignment in health care organization or delivery. With a new Presidential Administration and deep economic recession, profound changes now appear imminent. These changes are likely to impact gastroenterologists significantly, including who they treat, how they deliver care, and how they are compensated. This article considers the most likely reforms, including health insurance and the drive toward universal coverage; a shift to reimbursement models that reward quality over the entire episode of care; reorganization of health care delivery around more highly integrated practices, patient-centered medical homes, and accountable care organizations; and electronic health records, comparative effectiveness research, and reporting transparency as necessary tools for implementing systemic change. Finally, anticipating these changes, this article concludes with specific recommendations to enable gastroenterologists to adapt to new practice environments.

Abbreviations used in this paper: ACO, accountable care organization, CISNET, Cancer Intervention and Surveillance Modeling Network, E&M, evaluation and management, EHR, electronic health record, FFS, fee-for-service, GDP, gross domestic product, P4P, pay-for-performance, SGR, sustainable growth rate

 

In the United States health care expenditures average more than $7000 per person and total more than $2.4 trillion, an amount greater than India's entire gross domestic product (GDP) and 2.4 times that spent on health care by the average developed nation.1 Furthermore, health care spending accounts for an increasing proportion of the US economy: from 1980 to 2006 the share of economic activity devoted to health care grew 6-fold (from 9% to 16% of the GDP)1 and by 2018 expenditures are projected to exceed 20% of the GDP.2 These staggering costs exact a severe toll on American households, place American businesses at a competitive disadvantage, and threaten the fiscal balance of federal, state, and local governments.3 Yet despite such massive spending, access to care can be limited and the quality of care generally is uneven. Compared with Australia, Canada, Germany, New Zealand, and the United Kingdom, the United States ranks last or second to last in quality, access, patient safety, efficiency, equity, adoption of information technology, and quality improvement.4 Although federal policymakers have long acknowledged staggering costs and lackluster performance, particularly since the election of President Clinton in 1992, there still has been no fundamental realignment in the organization or delivery of US health care.

Only months into his first term, President Obama already has placed health care reform at the top of his policy agenda. Believing that health care reform is critical to the nation's economic recovery, his 2009 economic stimulus package included $150 billion in health care investments, primarily in health information technology and comparative effectiveness research.5 One month later, in his budget proposal to Congress, the President called for an additional $630 billion in investments through 2020.6 Determined not to repeat mistakes made by the Clinton Administration, the Obama Administration has invited multiple key stakeholders to participate in a dialog on reform. These participants have provisionally agreed to a certain set of basic principles, especially around cost control. Meanwhile, Congressional leaders are engaged in an intensive process to develop health reform legislation.

Thus, after decades of talking about health care reform profound changes finally appear imminent. Even if all of the initial goals of the Obama Administration are not achieved, changes are likely to affect gastroenterologists significantly, including who they treat, how they deliver care, and how they are compensated. This article considers ongoing and potential reforms that are most likely to influence practicing gastroenterologists, and offers recommendations to enable gastroenterologists to anticipate and adapt to new practice environments.

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Health Insurance Coverage Reform 

More than 1 in 6 Americans (45 million total, 80% of whom live in working families) lack health insurance. These individuals are more likely to forgo care or delay seeking treatment and are less likely to have a regular source of care and to follow medical recommendations. Consequently, they are considerably more prone to be diagnosed with late-stage diseases and hospitalized for potentially avoidable health problems, such as advanced-stage colon cancer.7

Over the past decades, many proposals have been put forth to expand coverage to all Americans. The Obama Administration favors incrementally building onto the current system in several ways. Employer-based insurance may be expanded through pay-or-play employer mandates, which require large employers to either provide health insurance or pay a percentage of their payroll into a government fund that will do it for them. Smaller employers may be exempt, but will be given refundable tax credits as an incentive to provide coverage. Public insurance (Medicaid) will continue to be expanded through the State Children's Health Initiative.7 Still, even with these measures a large population with neither employer- nor government-based health insurance would remain. Because of risk selection and underwriting, these individuals typically cannot obtain reasonably priced insurance. To address this concern, the federal government would create regional health insurance exchanges to pool risk over large populations, thereby offering small businesses and individuals affordable plans with standard benefits.8 One subject of heated debate is whether these exchanges should include a public insurance plan to compete alongside private plans. Also uncertain is how to pay for expanded coverage.

Alternatively, the “Healthy Americans Act” introduced by Senators Wyden and Bennett, proposes a more dramatic shift away from employer-based insurance. This plan, which has garnered broad bipartisan support, would require employers to convert health benefits into wages. All Americans (except those enrolled in Medicare and the military) would pay sliding-scale premiums based on income to enroll in private insurance programs offered through large, state-based purchasing pools.9

Although it is unclear how expanded coverage will affect gastroenterologists, improved access would enable gastroenterologists to care for larger, more diverse populations. Consequently, the demand for certain services, such as screening colonoscopy, may increase. For instance, in the year after health reform in Massachusetts, colonoscopy rates increased by 6%.10

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Payment Reform 

Most physicians are now reimbursed under the fee-for-service (FFS) model, which pays for discrete services rendered. This system has been criticized for encouraging quantity over quality, penalizing certain labor-intensive activities (eg, coordination of care and preventive medicine), favoring procedures over cognitive services, and, ultimately, fueling the fragmentation of care.11 Consequently, many argue that payment reform is critical to improving quality and reducing costs.12 Because the overuse of specialist services is considered a key source of waste13 and disproportionately high specialist salaries are regarded as a threat to the future of primary care,14 gastroenterology is a likely target. Some propose to improve on the FFS model (eg, by changing the sustainable growth rate mechanism or through pay-for-performance initiatives), while others would outright discard FFS (eg, bundled payment schemes that cover an entire episode of care or use capitation). These different proposals are not mutually exclusive: “Economic theory…suggests that mixed payment models will function better than any single approach. Which recipe will yield the best balance…remains to be seen.”15

Reforming the Sustainable Growth Rate Mechanism 

Under the FFS system payments typically are determined by the Medicare Resource Based Relative Value Scale fee schedule, which guides reimbursement for all Medicare plans and the majority of Medicaid and private insurance plans. In brief, the system estimates and geographically adjusts the relative resources required to provide a particular service (based on provider work, practice expenses, and malpractice costs) to assign it a specific number of relative value units. These relative values then are multiplied by a conversion factor to determine actual monetary reimbursement (in dollars). Importantly, the conversion factor is adjusted annually through the Sustainable Growth Rate (SGR) mechanism, which compares actual medical spending with a preset spending target linked primarily to overall economic growth. If actual spending is less than the spending target then the conversion factor increases. Conversely, if (as is ordinarily the case) actual spending exceeds targeted spending, then the conversion factor decreases, reducing the value of each relative value unit. In these cases physician reimbursement decreases unless Congress enacts legislation to reverse reimbursement cuts, as it has annually since 2003. However, because spending targets are cumulative (ie, last year's expenditure target * SGR = current year's expenditure target), spending that exceeds the target one year accumulates in future years until it is recouped.16 In other words, short-term legislative fixes make the long-term solution more expensive. For instance, after 5 consecutive years of emergency legislation, in 2009 physician payments faced a 10.1% reduction. Although this was averted with emergency legislation that provided for a 1.1% increase in the 2009 conversion factor, in 2010 physicians will face a 20% reduction,17 and over the coming decade a 40% reduction in fees,18 even as health care inflation vastly outpaces economic growth.

That actual spending annually exceeds targets highlights a fundamental flaw in the SGR: many factors, especially the cost of prescription drugs, included in the spending targets are outside of the control of physicians.19 Therefore, the American Medical Association advocates removing drugs from the SGR formula as well as eliminating the cumulative aspect of the SGR.18 Meanwhile, primary care proponents argue for a different type of SGR fix. Because the growth in expenditures has been driven primarily by non–evaluation and management (E&M) services (eg, surgical, diagnostic, and imaging services that typically are provided by specialists), they advocate splitting the SGR into an E&M and non-E&M pool.14 In this system the conversion factor for each pool would increase or decrease based on expenditure trends within that pool. Assuming a budget-neutral environment, in this scenario if the volume of non-E&M services continues to climb then gastroenterologists could see major reductions in procedure reimbursement. Nonetheless, political and economic costs have stalled such efforts to replace the SGR mechanism. Until that happens, gastroenterologists should expect continued threats of decreasing reimbursement, threats that likely will be averted by last-minute, short-term legislative patches.

Pay-for-Performance 

By providing financial bonuses and sometimes nonfinancial incentives (eg, preferred provider designations) to physicians and institutions that exceed certain quality benchmarks, pay-for-performance (P4P) seeks to link payment to quality rather than just quantity.20 For example, included among the 186 Physician Quality Reporting Initiative measures (2009) is a measure related to avoidance of inappropriate colonoscopy use (Measure 185).21 Participating physicians compare the number of patients with a history of colonic polyps who underwent a surveillance colonoscopy after at least 3 years (numerator) with the total number who underwent surveillance (excluding those who had a documented medical reason for having undergone an earlier surveillance examination) (denominator). Practices that exceed the benchmark receive a bonus payment (in 2009 the bonus is 2% if reported as part of their overall Physician Quality Reporting Initiative measures).

Although still a work in progress, P4P has been adopted by many commercial payers; in 2007 there were 148 P4P provider programs that covered more than 57 million Americans, or 23% of the insured population.22 But despite its broad implementation, P4P has faced criticism, especially for relying on a small number of predominantly process-based performance measures that may not relate to health outcomes.20 Do colon cancer surveillance intervals reflect the quality of colonoscopy? Or should the emphasis instead be placed on more meaningful outcome measures such as adenoma detection rates? Either way, can a single, narrow measure adequately indicate the total quality of a gastroenterologist's practice? Furthermore, the generally low P4P bonus payments may not be worth the considerable administrative burden. For example, the 10 largest commercial health plans use more than 60 different performance indicators and offer vastly different incentives.22, 23 It also remains unclear how to reward quality care delivered by multiple physicians, and whether physicians will try to game the system by turning away the sickest patients and/or shifting to provide services that are attached to bonus payments.24

Notwithstanding these criticisms, and evidence that P4P has had only a modest incremental value, the P4P strategy represents a fundamental and likely lasting paradigm shift to align payment with quality.23 For example, Medicare recently stopped paying for poor performance such as care related to preventable errors (eg, pressure ulcers, catheter-associated urinary tract infections) or never events (eg, surgery on the wrong body part).25 This trend could extend to gastroenterology practice (eg, treatment of postpolypectomy bleeding).

Bundled Payments 

Bundled payments describe a single payment for the complete episode of care, including multiple visits and procedures. Theoretically, bundled payments hold providers accountable to quality and costs, thereby encouraging increased coordination of care, decreased errors, and increased efficiency.12, 26 Payments can be bundled in several ways. One variation is case rates that provide a single payment for a specific procedure or surgery. For example, Geisenger Health System's ProvenCare charges a single payment, irrespective of actual costs incurred, for all services associated with certain surgeries through 90 days of follow-up evaluation. For coronary artery bypass surgery a single fixed case rate covers the preoperative evaluation, surgery and hospitalization, cardiac rehabilitation, and management of any related complications that occur up to 90 days after surgery.27 Payments also may be bundled to cover E&M services, such as the Robert Wood Johnson Foundation's Prometheus Payment Model, which uses evidence-based guidelines and severity adjustments to negotiate an evidence-informed Case Rate (Prometheus Payment, Inc, Philadelphia, PA) (representing the total amount paid to all providers involved in treating a particular episode of care).15 If these types of bundled payment schemes prove successful at driving higher-quality, more cost-effective care, it is likely that bundled payments one day will extend to digestive disease care, conceivably to a wide range of services such as management of pancreatic pseudocysts (encompassing medical, endoscopic, and surgical therapies) to management of hepatitis C viral infection. Adapting to these payment schemes will require gastroenterologists to show high-value care throughout the entire episode of care (ie, over time and across settings).28

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Reorganization of Health Care Delivery 

As has been the model for more than 100 years, most practicing physicians today are organized within private practices of fewer than 5 physicians. This cottage industry business model has been criticized for forcing patients to receive care across numerous providers who often lack the means to communicate efficiently with each other and among whom the accountability for patient outcomes sometimes is dispersed to the point of obscurity. Such fragmentation of care contributes to medical errors, waste, and duplication of work and therefore has been criticized as “a fundamental contributor to the poor overall performance of the US health care system.”29 Thus, (re)organizing care has potential for dramatically improving performance.29 Several models for reorganizing care have been proposed.

Integrated Medical Groups 

At the most basic level, physicians may be integrated into multispecialty groups in which primary care physicians and specialists are organized under a single clinical and business structure in which they share ancillary services and promote collaborative care. Clinical integration is even more apparent in vertically integrated health systems, which combine the delivery of multispecialty care with hospital services and sometimes a financing infrastructure (ie, a health plan). For example, Kaiser Permanente covers almost 9 million people in 8 regions and includes Kaiser Foundation Health Plan (which functions as a health insurer), Kaiser Foundation Hospital Corporation (functions as hospital owner and administrator), and the Permanente Medical Group (the physician organization).30 Finally, there are several other organizational alternatives including the virtually integrated independent practice associations, in which multiple individually owned practices are organized together in a legal structure to gain economies of scale for shared services and to coordinate clinical care of patients. The independent practice associations then contract with a health plan to provide comprehensive care, typically on a capitated basis, whereas individual providers are paid on an FFS basis.29, 30

Compared with small group practices, larger multispecialty or integrated groups may be better able to provide care consistent with the 6 characteristics that the Institute of Medicine links to quality care, including evidence-based care processes; effective use of information technology; knowledge and skills management; development of effective teams; coordination of care across patient conditions, services, and settings over time; and use of performance and outcome measurements for continuous quality improvement and accountability.31 Although this mostly remains to be proven, some empiric evidence suggests that more integrated delivery systems produce higher-quality, more efficient care. For instance, large group practices are more likely to engage in quality improvement, use electronic medical records, practice in teams, and coordinate care.12 Furthermore, larger and more integrated groups are better able to adapt to bundled payment models (Figure 1).29

Patient-Centered Medical Homes 

Because current reimbursement and care delivery models threaten the viability of primary care,14 a growing movement seeks to reorganize primary care around patient-centered medical homes, defined as clinical settings that provide high access and communication, robust data systems, and dedicated care coordination to serve a patient's ongoing needs. Practices that meet certain medical home-qualifying standards may receive increased reimbursements, such as a capitated monthly case management fee (a type of bundled payment) and pay for performance bonuses.15, 32 In exchange, medical homes are expected to contain costs by reducing unnecessary emergency department visits and hospitalizations.32

So far, medical homes have remained largely confined to initiatives such as those by the Patient-Centered Primary Care Collaborative and the State of Pennsylvania (Medicare demonstration projects are slated to begin later this year). Still, many professional societies are vigorously championing expansion—which would impact gastroenterology profoundly. First, as Senate Finance Committee Chairman Baucus stated, “Budget-neutral changes to Medicare payments mean that any increase to primary care providers requires a corresponding cut to specialist services.”33 Second, although claiming that medical homes are “not intended to limit appropriate referrals to specialists,” the American College of Physicians acknowledges that medical homes may “decrease the likelihood of inappropriate, unnecessary referrals.”34 To some, this may sound eerily reminiscent of the days of managed care gatekeepers. Still, gastroenterologists also may reap some personal benefits, especially if it is easier to communicate and coordinate care with medical home-based primary care physicians. But absent financial arrangements for gastroenterologists outside of the home, there may be little incentive to communicate and collaborate.35 Alternatively, some gastroenterology practices may opt to serve as medical homes for patients with chronic gastrointestinal disorders, such as inflammatory bowel disease or chronic liver disease. In doing so, gastroenterologists may receive payments for services that they already may have been providing, such as prevention and coordination of care. Yet, should they opt for a medical home designation, gastroenterologists (or their team members) would be required to provide first-contact routine medical care for nongastrointestinal conditions such as urinary tract infections and headaches.

Accountable Care Organizations 

Others advocate reorganizing around Accountable Care Organizations (ACOs) or “local networks of providers that can manage the full continuum of care for all patients within their provider network.”36 These voluntary networks may consist of large multispecialty groups, private practices in an independent practice association, physician-hospital organizations, or academic medical centers. Within an ACO individual providers are reimbursed on an FFS basis less a withhold. At year's end should their ACO cut costs and achieve documented quality improvements then they are rewarded with a share of the savings their ACO achieves. In theory this shift away from volume to value-based reimbursement encourages integration and coordination of care and discourages unnecessary spending.37 Gastroenterologists who decide to participate in these organizations may have extra incentives to coordinate care closely with other providers, measure and report the quality of their practice, and strongly consider the costs and benefits of various tests and procedures.

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Additional Tools for Reducing Costs and Improving Performance 

Health Information Technology 

Health information technology, which includes electronic health records (EHRs), computerized order entry, and electronic prescribing, has been touted as a means for “dramatically transforming the delivery of health care, making it safer, more effective, and more efficient.”38 It may do so by improving patient monitoring, facilitating care coordination between providers, decreasing duplicative testing, supporting medical decision making, increasing guideline adherence, reducing errors, and collecting outcomes required for quality improvement.39 Moreover, health information technology makes it easier for providers to collect and report their own performance data to payers and consumers. Despite this potential, EHRs have not been widely adopted; only 15% of US physicians use even a basic system.40 Major limitations include the cost of implementation, cultural resistance from physicians, and a lack of standardization and system interoperability. Nevertheless, recent legislation strongly promotes health information technology. The stimulus bill includes $19 billion for EHRs, including financial incentives of up to $65,000 per eligible physician and $11 million per hospital for meaningfully adopting EHRs.5 In addition, Medicare currently is offering a 2% bonus to eligible providers who use qualified systems to prescribe electronically.41 These incentives eventually will be replaced by penalties; by 2012, those who do not e-prescribe will face a 2% reduction in their Medicare fee schedule payments, and by 2015 physicians who do not use EHRs will face similar fines.5, 42

Comparative Effectiveness Research 

The 2009 stimulus bill also includes a $1.1 billion investment into comparative effectiveness research. This research analyzes the impact of different diagnostic and treatment options. The results, especially if linked to financial incentives and EHRs, can encourage providers to choose therapies that achieve better, more efficient results. Overall, the potential cost savings may be substantial.43 But this assumes that health care organizations are willing and able to incorporate these assessments into daily practice. Some providers fear that this will equate with cookbook medicine, which erodes their autonomy.

The recent decision by the Center for Medicare and Medicaid Services to deny coverage for computed tomography colonography may herald a future in which comparative effectiveness research also influences which technologies are adopted. This decision to deny coverage was in part based on the results of the Cancer Intervention and Surveillance Modeling Network (CISNET) study, which found that at its current cost computerized tomography colonography was not cost effective relative to other colon cancer screening modalities.44 However, restricting the availability of certain tests and treatments likely will generate significant public resistance, as surrounds the United Kingdom's National Institute for Health Excellence.

Public Reporting Transparency 

Traditionally, the quality and costs of individual health services have neither been measured nor made publicly unavailable. However, this information is required by many health care movements including P4P and value-based purchasing, as well as health care consumerism (ie, models that encourage individuals to assume an increased financial and decision-making role in their health care). Accordingly, there has been a growing interest in encouraging health plans, hospitals, and providers to collect and report relevant performance data, with more than three fourths of health care opinion leaders considering increased transparency important for improving the health care system's performance.45 This transparency can help motivate physicians to improve performance, assist purchasers in selecting more efficient health plans, enable public and private insurers to reward higher quality and more efficient care, and allow patients to make more informed choices about their care.46 Consequently, Medicare launched the Physician's Quality Reporting Initiative, which in 2009 gives a 2% bonus payment to providers who report data on certain quality measures. Eventually, these data may be displayed on a Center for Medicare and Medicaid Services–sponsored “Physician Compare” web site that helps beneficiaries choose higher-quality providers. Of course, reporting raises several key questions, including: Which measures to report? Can the measures be adequately risk adjusted? Will health plans and providers be motivated to improve their practices?46 And, can the public understand and effectively use the reported data? Because ordinary citizens may not be able to adequately discriminate between high and low performers based on information alone, other strategies may be needed to encourage higher-value health decisions. One such example is value-based insurance plans that link tiered copayments and co-insurance to provider value (ie, quality and outcomes relative to cost). Within a given network the highest-value gastroenterologists would be assigned the lowest copayments and vice versa.47

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Conclusions 

Despite staggering costs, the US health care system still is plagued by limited access, uneven quality, and suboptimal outcomes. In the current economic and political climate, health care reform appears quite likely. Gastroenterologists therefore should prepare for changes along the following lines:

■Expanded health insurance may improve access to care and, by extension, increase demand for gastroenterological services, such as screening colonoscopy.10

■Given concerns that they are overused and disproportionately paid, payment reforms likely will target specialists such as gastroenterologists. Already over the past decade there has been a trend toward reduced payment for procedures, including both professional fees as well as ambulatory surgery center facility fees. According to a joint statement by major gastroenterology societies in January 2009, “The current reimbursement trend is dismal for GI endoscopic services. Payments are declining significantly and will drop below the cost of providing services if the present course is not reversed.”

■The trend toward rewarding quality rather than just quantity likely will continue. To participate in these systems, gastroenterology organizations are developing reliable measures of health care quality48 and identifying meaningful patient health outcomes. Likewise, individual gastroenterologists must be willing to use these measures to determine and report their own performance.49

■Although use is currently low, recent legislation provides large financial incentives for physicians to adopt EHRs. Eventually, those who do not use EHRs will face penalties, making now the opportune time for purchasing and implementing an EHR system.50

■Emerging measurement, reporting, and EHR requirements, coupled with potentially more tightly bundled payment structures, will be challenging initially. Larger, more integrated practice groups may be better able to accommodate these changes.51 Even if patient-centered medical homes do not spread to gastroenterology,52 these practice groups may choose to organize around multidisciplinary care teams53 and some may orient themselves around specific clinical areas.54

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Acknowledgments 

The author is deeply indebted to John Allen, MD, MBA, for sharing his many insights on this topic. The author also is grateful to Derek Dorn, JD, and Robert Sandler, MD, MPH, for their critical review of this manuscript.

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 Conflicts of interest The author discloses no conflicts.

PII: S1542-3565(09)00674-0

doi:10.1016/j.cgh.2009.07.018

Clinical Gastroenterology and Hepatology
Volume 7, Issue 11 , Pages 1168-1173, November 2009