Health Care Systems and HMOs

There is widespread agreement that the current fee-for-service approach to paying for health care is problematic, but there is a lack of consensus on what should replace it. Medicare is pursuing bundled episode payments, and proponents like Francois de Brantes of the Health Care Incentives Improvement Institute have been laying the groundwork for implementation. But other experts, such as the Urban Institute's Robert Berenson, worry that the current interest in bundled payments will distract policy-makers from moving more decisively away from fee-for-service. In this Robert Wood Johnson Foundation-funded paper, de Brantes and Berenson debate the benefits and drawbacks of bundled payments and global capitation.

Over the first decade of the 21st century the role of risk-based managed health care for publicly insured beneficiaries has expanded substantially. This report examines this form of health care delivery in 20 states for both Medicaid and CHIP non-elderly adults and children, including people with disabilities. The 20 states were chosen because they include over 80 percent of both Medicaid and CHIP beneficiaries who are enrolled in risk-based managed care. Findings are based on interviews with state Medicaid and CHIP officials, as well as representatives from 40 Managed Care Organizations (MCOs) serving Medicaid and CHIP beneficiaries, and 40 health care providers or provider organizations. In addition, the report contains published data from various sources, including measures of access to care, quality of care, and satisfaction with care over the study period (2001-2010).

Safety-net hospitals will continue to play a critical role in the US health care system, as they will need to care for the more than twenty-three million people who are estimated to remain uninsured after the Affordable Care Act is implemented. Yet such hospitals will probably have less federal and state support for uncompensated care. At the same time, safety-net hospitals will need to reposition themselves in the marketplace to compete effectively for newly insured people who will have a choice of providers. We examine how five leading safety-net hospitals have begun preparing for reform. Building upon strong organizational attributes such as health information technology and system integration, the study hospitals' preparations include improving the efficiency and quality of care delivery, retaining current and attracting new patients, and expanding the medical home model.

This report is one in a series of 10 on state implementation of the Affordable Care Act. There is significant political opposition to the implementation of health reform in Virginia. The state has not yet indicated how it will respond to the now optional expansion of Medicaid coverage or whether it will establish an exchange. But meanwhile, the state has created a highly regarded process for debate on the exchange. The state experiences ongoing budget pressure because of the recession which is affecting state decision-making. The state could benefit from strong competition within its insurance and provider markets under reform.

Using the Health Insurance Policy Simulation Model, this report analyzes four policy options for assessing employers who do not provide affordable health insurance to their workers as Massachusetts brings its health reform law into compliance with the Affordable Care Act (ACA). Overall coverage and costs are similar across all options, but replacing the state's Fair Share Contribution (FSC) requirement with the ACA assessment would eliminate a source of state revenue. Similarly, maintaining the FSC for small employers only would raise one-fifth as much revenue as leaving the current assessment in place.

In a March 2012 article in Health Affairs, a team of authors from the Urban Institute and Mathematica Policy Research finds that achieving ambitious goals for the adoption of electronic health records and the nationwide exchange of electronic health information will require overcoming a number of hurdles. First and foremost, providers and patients have to be persuaded of the value of exchanging information and have to be supportive of steps to make it possible. For example, there are broad concerns about the tradeoffs between sharing information electronically and safeguarding the privacy and security of patients’ health care data. A case in point: existing federal law provides for the use of a single identification number for every US patient, but Congress has blocked the use of federal funds to develop this ID system because of privacy concerns.

This Health Affairs article by Bob Berenson and co-authors applies scrutiny to the market power that some health care providers, particularly dominant hospital systems, wield to negotiate higher payment rates from insurers. Based on interviews in 12 U.S. communities, they find that so-called "must-have" hospital systems and physician groups are obtaining steep payment rates from insurers. Even in markets with dominant health plans, insurers have not been aggressive in constraining rate increases, perhaps because they can simply pass along costs to employers; the dominant insurers only need to get the most favorable rates, not low rates. These findings suggest a range of market and regulatory approaches should be examined to address growing provider market clout.

When physicians practice defensive medicine by ordering extra tests and procedures that have little or no benefit mainly to avoid malpractice lawsuits, they reduce the quality of the care they provide and increase health care costs. The introduction of reliable clinical practice guidelines-recommendations for optimizing patient care based on scientific evidence-promises to set standards of good care and reduce utilization of unnecessary procedures. Some have proposed that following such a guideline should give caregivers a liability "safe harbor," shielding them from any malpractice claim for failing to provide services not included in the guideline. The intent is to reduce incentives to practice defensively without imposing broader limits on liability through "tort reform." This brief examines how legislating safe harbors would work in theory and practice. It suggests that quality-promoting guidelines hold some promise for cutting wasteful defensiveness, but that practical feasibility limits their reach.

With less than two years to go before the Affordable Care Act is fully implemented, the State of Colorado is reasonably well positioned. A bipartisan foundation was built before the ACA became law, and stakeholders have largely worked collaboratively to begin putting various required policies and structures in place. Adopting a "Colorado-specific" version of health reform has been critical for state policymakers in responding to the ACA, and was a key factor in the successful passage of exchange legislation. Strong leadership, bipartisan political support, and continued aggressive action will be needed for Colorado to succeed in implementing reform on time.

Regardless of how the Supreme Court decides the constitutionality of the individual mandate, the health care debate is now reignited. If the mandate is sustained, the Accountable Care Act enacted under President Obama still has too many kinks to remain unaltered. If it's thrown out, a return to the unsustainable system with growing numbers of uninsured is not a solution. Yet no fix is possible as long as elected officials dodge the basic arithmetic of health care.