Today at the Institute of Medicine I listened to Douglas Elmendorf from the Congressional Budget Office(CBO) followed by Nancy-Ann Deparle the health reform director at the Whitehouse and came away thinking we really have a bigger problem than we think.To Mr Elmendorf's credit, he admits there is so much uncertainty in most aspects of American medical care it becomes almost impossible to predict the financial outcomes of healthcare reform. Many factors come into play such as the sustainable growth rate(SGR) which is the physician payment schedule reduction.The present legislation assumes the SGR will go down not up over the next 10 years. The reality is congress has eliminated the reduction in physician payments every year since the formula was passed into law.This is only one of many factors that create uncertainty as to whether the health reform bill can deliver the financial results it has been predicted to deliver.
Mr. Elmendorf is right,predicting what new federal programs cost is not an accurate science.The most recent major healthcare program enacted was Medicare Part D which covers some drug benefits for Medicare beneficiaries.The CBO cost estimate for that program actually was 40% more expensive than the planned.It is reasonable to assume that CBO estimates for the new health legislation will also be significantly inaccurate as well.
The Massachusetts example is the only thing we can use at this point to try to predict the federal legislation financial outcome.Massachusetts now has well over 95% of residents covered by health insurance and the cost is close to 50% higher than before the bill was passed.This explosive growth in cost is leading to radical changes.Recently the Massachusetts payment commission approved moving to "global payments" for health services.These payments are as yet undefined but the dramatic rise in cost of care is necessitating dramatic solutions most of which are entirely untested.The more concerning rhetoric is that rationing of services may be next.
With this scary backdrop we continue to remain focused on the core principles of reform the center has espoused from the beginning. These principles are:transparency of cost and quality performance,payment reform,and delivery system redesign.
Transparency pushes us in the direction of understanding value. In other words we need quality and cost outcomes data on providers publicly reported so patients,employers, and the government can make good decisions. See www.wchq.org for a great example.
Payment reform is also required. In Wisconsin the Wisconsin Health Information organization is sponsoring a multi stakeholder initiative in which three subcommittees have formed to carefully evaluate how providers are paid to deliver acute,chronic, and preventative care services.These subcommittees are meeting monthly to struggle with difficult issues in changing our payment system.a recommendation for some potential pilots on reform is targeted for Jan. 2011.One thing is certain though,creating wholesale payment reform change without having first piloted such change won't happen.the teams expect the recommendations to be piloted in various communities across the state before any statewide changes are recommended.
Finally, we all know radical delivery system design is also required.June 9th and 10th the Healthcare Value Leaders are hosting the Lean Healthcare Transformation summit in Orlando.Anyone serious about system wide transformation to continuous improvement should attend. Jim Womack will be there along with Mark Graban yours truly, as well as many great health systems all of whom have committed to lean transformation.30% reduction in the cost of inpatient care with 100% quality reliability is possible and this first annual summit will be focused on teaching people how to do it.
In summary, If we take the waste out of care delivery,report our results publicly,and pay for value not volume,we won't need to worry if Mr. Elmendorf's forecast is off by 40% or not.
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