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From Medicare Newsgroup:
The Affordable Care Act’s Impact on Hospital Quality, Profitability, and Patient Care

Why Was the American Hospital Association (AHA) So Interested in the Creation of the Affordable Care Act?

The Affordable Care Act (ACA) was a tremendously significant piece of health care legislation, particularly for hospitals that had much to gain—or lose—depending on the type of reforms implemented.

Hospitals are under increasing pressure to cut costs and control spending. This reality, combined with the struggling economic climate, has made hospitals particularly concerned about how health reform will affect their bottom line. Thus, the American Hospital Association (AHA), the national organization that represents nearly 5,000 hospitals and health care networks in America, as well as 40,000 individual members, has a clear vested interest in health care reform, as it could change everything from hospital administration to patient care delivery to profitability.

Since 2008, the AHA has made sure to involve itself in the policy details of the ACA, as well as the political process that led to its passage. In 2009, the AHA spent more than $7 million dollars on its Washington lobbying campaign, ranked near the top spending in the industry. Tom Nickels, the AHA’s senior vice president of federal relations, heads a team of 28 lobbyists, and the AHA also makes significant contributions to members of Congress and congressional candidates. In 2008 and 2010, the AHA contributed more than $2 million in each year to candidates, with more than $1 million going to Democrats, according to data from the nonprofit Center for Responsive Politics. In addition, Richard Umbdenstock, president and CEO of the AHA, frequently visited the White House in 2009 in the months leading up to the ACA’s passage.

With so much at stake, the AHA ultimately positioned itself as a partner in health care reform. After a series of negotiations, the AHA, along with two other hospital associations, agreed to accept $155 billion worth of cuts in Medicare reimbursements and other payments throughout the next decade in order to help the government fund other reforms. Recently, Umbdenstock commented on the final legislation, saying, “We supported it, imperfect as it is. Now it is much more important to build on it and improve it.”


Which Provisions of the Affordable Care Act (ACA) Does the American Hospital Association (AHA) Oppose?

The American Hospital Association (AHA), the national organization that represents nearly 5,000 hospitals and health care networks in America, as well as 40,000 individual members, has a clear vested interest in health care reform, as it could change everything from hospital administration to patient care delivery to profitability.

The AHA has expressed concern about some of the reforms included in the ACA, such as the Independent Payment Advisory Board (IPAB) and hospital readmissions penalties. The AHA has also called for a permanent fix for the Medicare physician payment formula, which was not included in the ACA.

Independent Payment Advisory Board (IPAB)

The Affordable Care Act (ACA) establishes an Independent Payment Advisory Board (IPAB), composed of 15 members appointed by the president and confirmed by the Senate, whose job will be to recommend savings in the Medicare program with fast-track congressional approval procedures. The IPAB’s recommendations with be binding—meaning that recommendations will quickly move to Congress for consideration; if Congress does not act in the required timeframe, the secretary is required to implement IPAB’s recommendations on a fast-track basis. This is one of the most contested creations of the ACA, as physicians and hospitals worry that it puts important payment and policy decisions in the hands of an independent and unelected body—essentially giving the IPAB too much authority. AHA President and CEO Richard Umbdenstock explained that the AHA opposes the IPAB because hospitals have already agreed to have $155 billion of future payments cut and redeployed to pay for coverage of more Americans. Therefore, it does not want to be subjected to an additional annual rate-cutting process by the IPAB. Thus, the AHA hopes to see a repeal of the IPAB in 2012, and is particularly concerned with the impact it will have on critical access hospitals.

Hospital Readmissions

Avoiding admission and reducing readmissions are some of the most effective ways to save on hospital expenses, according to the Physician Group Practice (PGP) Demonstration initiative. This initiative was developed in 2005 by the Centers for Medicare & Medicaid Services (CMS) and created a group of 10 provider organizations and physician networks to test shared savings. PGP Demonstration providers were incentivized to coordinate care delivered to Medicare patients. By year three of the program, five providers collectively received more than $25 million in bonuses as a share of $32 million in Medicare cost reductions.

Based on the results of this study, the ACA has instituted financial penalties for hospitals with “excessive” readmissions. The AHA acknowledges that reducing readmissions is important and notes that, “Hospitals are being very creative with strategies to address readmissions, such as sending social workers or nurses to patients’ homes, or providing scales to heart failure patients in their homes—all free of charge. Some hospitals have been advised by their lawyers that they cannot provide free services to patients who leave their hospital because it is viewed as an inducement to provide potentially unnecessary services.” Thus, the AHA has issues with the readmission penalty and seeks to fix the readmissions policy, which it deems to be “faulty.”

Lack of Fix for the Medicare Physician Payment Formula—the Sustainable Growth Rate (SGR)

The Sustainable Growth Rate (SGR) calculates the percentage reimbursement that Medicare providers receive, primarily based on the growth of the rest of the economy. In recent years, the growth rate of Medicare spending has consistently exceeded gross domestic product (GDP) growth; therefore, the SGR is consistently being reduced. In order to avoid dramatic reductions in physician reimbursement rates, Congress passes a “doc fix” at the end of each year and essentially stalls the cut. The American Hospital Association supports a permanent fix to Medicare physician payments; however, the group wants to make sure that goal is not achieved at the expense of hospital payments.

Why Are Hospitals
Focused on Reducing Readmissions?

There are financial incentives built into the Affordable Care Act (ACA) that push hospitals to improve quality, as reflected by lowered readmission rates. Starting in 2012, hospitals will be fined for high rates of 30-day readmissions for Medicare patients with suffering from heart failure, heart attack and pneumonia. Hospitals with higher-than-expected readmission rates will receive payment reductions of up to 1 percent in 2012. The maximum reduction will increase to 2 percent for discharges starting in 2013 and to 3 percent in 2014.

What Does the Affordable Care Act (ACA)
Do to Improve Medical Effectiveness?

The Affordable Care Act has created the Patient-Centered Outcomes Research Institute (PCORI), an independent, non-profit organization that compares the clinical effectiveness of various treatments and procedures. PCORI funds research to better inform patients, families and caregivers in assessing the value of health care options.

PCORI aims to commit at least $355 million in support for patient-centered clinical effectiveness research (CER) in 2013. In May 2013, PCORI’s Board approved $88.6 million in support for 51 projects under the institute’s second cycle of primary research funding. In April 2013, PCORI also announced its plans to invest $68 million toward the development of a National Patient-Centered Clinical Research Network.

This research answers patient-focused questions, such as:

  • “Given my personal characteristics, conditions and preferences, what should I expect will happen to me?”
  • “What are my options and what are the benefits and harms of those options?”
  • “What can I do to improve the outcomes that are most important to me?”
  • “How can the health care system improve my chances of achieving the outcomes I prefer?”

To answer these questions, PCORI:

  • Assesses the benefits and harms of preventive, diagnostic, therapeutic or health delivery system interventions to inform decision-making, highlighting comparisons and outcomes that matter to people.
  • Includes an individual’s preferences, autonomy and needs, focusing on outcomes that people notice and care about, such as survival, function, symptoms and health-related quality of life.


What Are the Various Ways to
Measure and Compare Health Care Quality?

There are several trustworthy programs that measure the quality of health care.

The Consumer Assessment of Healthcare Providers and Systems (CAHPS), a public-private initiative of the Agency for Healthcare Research and Quality (AHRQ), aims to assess consumers’ experiences with health care by developing and maintaining standardized questionnaires that can be used across various sponsors and across time to create measurement tools and resources that can be easily understood and used by consumers and providers.

The federal agency that administers Medicare, the Centers for Medicare & Medicaid Services (CMS), offers a bevy of statistics, databases and reports that show quantitative measures of their programs. These reports cover future spending estimates on Medicare and Medicaid and a broad range of consumer research, and in June, the organization publishes a booklet that provides a summary of Medicare and Medicaid program expenditures.

Another helpful tool is CMS’ five-star rating system for Medicare Advantage Plans (Part C). One star is given to plans that display poor performance, three stars for average performance and five stars for plans that show excellent performance. The ratings are based on information gathered from satisfaction surveys, plans and health care providers. There are tools on the CMS website to help consumers, their families and providers compare the quality of various health care plans.

As part of its quality improvement activities, CMS — in collaboration with the National Committee for Quality Assurance (NCQA), which releases an annual State of Health Care Quality report — launched the Medicare Health Outcomes Survey (HOS), a patient-reported survey that tracks the quality of care provided by Medicare Advantage Organizations (MAOs; also known as Part C), plans offered by private companies approved by Medicare. The survey ensures that all medical care programs paid for by Medicare meet professional standards.

The most recent iteration of the program — HOS 2.0 —comprises four primary components. These are the Veterans RAND 12 Item Health Survey (VR-12), which provides summaries of the physical and mental health of patients; questions to gather information for case-mix and risk adjustment; four Health Care Effectiveness Data and Information Set (HEDIS) measures, which are widely used and therefore helpful in comparing the quality of care between providers; and additional health questions.

Another reliable place for quality care information are the case files of the Independent Review Entity (IRE), which evaluates the appeals of Medicare recipients who disagree with the initial decisions on their claim. Patients have the right to appeal the decisions on Medicare services, whether the patient has the Original Medicare (also known as traditional Medicare; Original Medicare includes hospital insurance (Part A) and medical insurance (Part B)), a Medicare managed plan (Part C), or a Medicare Prescription Drug Plan (Part D). Reconsideration case files are stored for seven years from the end of the calendar year in which final action is taken.

The notices must be written clearly, be culturally competent and take any of the enrollee’s special requirements into consideration, including medical conditions, disabilities and language needs.