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Simone's OncOpinion: The Affordable Care Act and Its Zinger

Simone, Joseph V. MD

doi: 10.1097/01.COT.0000406627.89789.72


Many of us have mixed feelings about the Affordable Care Act. The main reason is that the specific details are not complete, so we are not sure what it will mean for our patients and us. In some circles the run-up to the national elections has led to political opposition, but for others opposition is based on fear, ignorance, or misunderstanding.

Gradually, some of the details are being developed and released, which allows us, if we wish, to base our opinions on fact instead of emotion or demagoguery.

The best summary of the ACA with annotated details that cover topics of most interest to me appeared in an article by Elizabeth Belmont et al published in the July issue of Health Affairs: “A New Quality Compass: Hospital Boards' Increased Role Under the Affordable Care Act” (2011; 30:1282-1289 — (

The authors (eight of nine are attorneys specializing in health care) cover a number of key issues that impact physicians and hospitals, which I will summarize here, but I urge you to read the full article. A key feature in the ACA that I had not appreciated before explains the responsibilities of hospital boards of directors. It is a zinger and, I believe, the most important part of the article; I will deal with that last.

During the Bush administration, the Centers for Medicare and Medicaid Services (CMS) instituted a policy in 2008 to deal with “never events.” These are medical problems in hospitals that are avoidable in most cases through the exercise of reasonable care and should “never” happen, such as pressure ulcers and postoperative infections.

CMS listed those events and declined to reimburse hospitals for the care needed for them as a means of trying to reduce these negative results. Commercial insurers later followed suit, and state governments' instituted regulations and statutes that put further pressure on hospitals to eliminate these complications.

The ACA will extend this policy by legislating new financial penalties for falling short of quality expectations. Starting in 2015 the revenue from these financial penalties, a 1% annual holdback from the quartile of hospitals with the highest percentage of “never events” and other quality failures (see below) will be reallocated to reward hospitals that have done the best job of meeting the quality benchmarks.

Starting in fiscal 2013, to put more pressure on hospitals to meet quality benchmarks, Medicare will institute a value-based purchasing system. Payments to all hospitals for specific conditions—e.g., heart failure, pneumonia, myocardial infarction, etc.—will be reduced by 1% (that will increase to 2% by fiscal 2017). That pool of funds will be used to reward hospitals that have performed well in meeting quality benchmarks.

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‘Bundled Payments’

The first mention of cancer care in the article came under “bundled payments.” CMS will institute a new pilot program that will provide bundled payments for hospital episodes of care for several medical conditions, including cancer care and other chronic conditions.

These payments will cover the costs of such activities as acute inpatient care, physician services provided inside and outside the acute care hospital setting, outpatient care, post-acute care including home health services, and others. This will give providers an opportunity to show how they can use a systems-based approach to improve the quality of care while reducing total expenditures.

The article covers other aspects of the ACA, including Accountable Care Organizations, essentially a joint effort of hospitals and physicians designed to improve quality and lower costs. The ACOs can earn “bonus” payments for exceptional performance.

The requirement for a systems-based approach to care and the responsibility of hospital boards of directors for the quality of care may turn out to be the most important aspects of the ACA for improving the quality of care. The following background from the Belmont article helps us to understand the impact of the ACA on the responsibility of hospital boards of directors.

“Hospital boards are accountable for the quality of care at their institutions, under federal reimbursement regulations and accreditation standards. Therefore, hospital board members should take an increasingly active role in quality oversight to ensure that the ACA's new mandates are met. Given the Act's emphasis on clinically integrated, systems-based care, hospital boards and their medical staffs need to reevaluate the design and effectiveness of their quality oversight processes, including those specifically related to the credentialing and peer review of physicians and other licensed independent practitioners on staff.

“Currently each practitioner is evaluated—in both credentialing and peer review—in isolation and in accordance with what is called the community “standard of care.”

The ACA's pervasive emphasis on systems-based medicine challenges this individualized approach by suggesting that the primary question is not so much whether a practitioner demonstrates reasonable judgment and skill as an individual, but whether that practitioner functions effectively within the system of integrated care that the Act envisions.

The article continues: “Organizationally, this change in emphasis requires successfully coordinating the peer review functions traditionally performed through a hospital's medical staff, the quality oversight functions typically performed through a hospital's quality management department, and the organizational planning functions traditionally performed by the hospital's senior management team and the board. A systems-based approach requires proactive board leadership. A successful quality oversight program therefore should be board driven.” [Emphasis mine]

There are some hospital boards that do a good job, but too many members are appointed for social or financial reasons and too few that are willing and able to hold the executives accountable for the quality of care in their institution. I have been critical of boards of directors because they reward hospital executives for the financial performance of the institution, but do not penalize them for poor quality of care, medical errors, long waiting times, and other issues so important to patients.

Nor do they reward them for meeting high quality standards. Most boards are populated by a predominance of businessmen, who naturally understand and value financial performance above other issues. Since this is often the case, the ACA will get their attention by imposing financial penalties on the hospital for poor quality of care; that will be easy for all trustees to understand.

Whatever else is in the ACA, I applaud the movement toward higher quality, lower cost of care, and the synchronization of care that is too often badly fragmented in this country. The focus on what happens to the patients and whether care and cost is efficient are welcome antidotes to relying on more and more technology that too often increases the distance between patients and providers and increases the cost of care unnecessarily.

Copyright © 2011 Wolters Kluwer Health, Inc. All rights reserved.
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