AAMC Reporter: September 2009

More Than Just Insurance, Reform Forges Ahead

The health care reform debate has returned to Washington, and along with it the national tug-of-war over price tags and the public option. Meanwhile, various incarnations of reform legislation—many of which could markedly affect medical schools, teaching hospitals, and physicians—are following a quieter, if not simpler, path toward the president's desk.

Following the August recess, President Obama began aggressively pushing his own health care agenda, and a massive House bill was moving haltingly toward floor consideration. In the Senate, further action on a reform package already passed by the Health, Education, Labor, and Pensions Committee, which oversees numerous public health programs, was on hold while the powerful Finance Committee finalized its own proposals. Observers believe the Finance Committee is important not only because it holds sway over Medicare and Medicaid spending, but because a group of six Finance Committee Democrats and Republicans, led by Chairman Max Baucus (D-Mont.), represents a last tenuous thread of across-the-aisle cooperation.

"There has been work in the Finance Committee to reach some sort of bipartisan compromise," said Ross Frommer, deputy vice president for government and community affairs at Columbia University College of Physicians and Surgeons. "But there has been some frustration with Senator Baucus on the part of Democrats because of his insistence to work with Republicans. But working without Republicans is risky. It could be seen as trying to ram something through."

If Senate Democrats choose to proceed without significant Republican support, they may do so through budget reconciliation, a procedural tool that requires only a 51-vote majority—rather than a filibuster-proof 60 votes—for approval. This option, however, might further destabilize reform legislation.

"If [Democrats] were to use budget reconciliation, it puts them at risk from a parliamentary perspective," Frommer said. "That is why there has been some talk of splitting up the bill—purely budgetary matters could go through reconciliation, and others could stay along the normal track."

Political gymnastics aside, many provisions in the bills carry enormous potential to alter the health care landscape. For example, the formula that calculates how (and how much) physicians are paid could change dramatically. The current formula, known as the Sustainable Growth Rate, which would be replaced under the House bill, is scheduled to produce a 21 percent payment reduction effective Jan. 1, followed by continued negative updates in subsequent years. The Resident Physician Shortage Reduction Act of 2009, introduced in the House and Senate in May, would increase by 15 percent the number of residency training slots supported by Medicare. This may be especially important, officials said, because of a predicted physician shortage that could prove problematic if health coverage is expanded and demand for health care goes up. Its estimated $12 billion to $15 billion cost, however, may threaten its passage, experts said. The legislation contains other provisions seemingly designed to bolster the nation's primary care workforce. House reform legislation contains $89 billion over 10 years for workforce and public health—a shot in the arm for programs including Title VII health professions training and the National Health Service Corps.

One standalone bill that could put academic medical centers at the forefront of the reform movement is the Healthcare Innovation Zone Program Act. Introduced July 8 by Rep. Allyson Schwartz (D-Pa.), the relatively modest proposal would create 10-25 planning grants of between $250,000 and $1 million to health care institutions that design an innovative model of care and then test it for three years. Academic medical centers, experts said, could serve as health innovation zones because of the wide range of services they provide under one roof.

"This proposal would move away from strictly insurance reform and toward developing policies that would lower the rate of cost growth while improving health outcomes," said AAMC Chief Advocacy Officer Atul Grover, M.D., Ph.D.

On the other side of the coin, some issues remain conspicuously absent from current legislation. In particular, tort reform, which would involve changing federal laws governing medical malpractice lawsuits, could be used as a bargaining chip to help jump-start bipartisan discussions. Many physician groups view tort reform as a top policy priority.

"Tort reform is interesting because it has not appeared in any of the reform legislation," Frommer said. "The question is, how much tort reform might Democrats be willing to put on the table, and how much does it mean to Republicans to see this, so that they would come over and support the bill?"

In the meantime, many academic medical centers are beginning to reform delivery systems on their own. To facilitate this process, and to anticipate changes associated with national reform, some centers are designating transformation innovation officers, who are tasked with, among other things, tracking reform efforts and expediting operational changes.

"We are using techniques to help people work through the idea that more of what we were doing would not work, and showing them how to deal with problems differently," said William W. Stead, M.D., associate vice chancellor for strategy/transformation and chief information officer at Vanderbilt University Medical Center. "The only way health care can respond to reform efforts is to drive toward a dramatic increase in the value we provide."

—By Scott Harris